Unemployment Flashcards
(9 cards)
What are the two ways to measure unemployment
Claimant count method: counts the number of people collecting job seekers allowance
Labour Force Survey: Asking 60,000 people whether they were unemployed and whether they were looking for a job
What are the issues with the labour force survey
People might not answer honestly
It is only a sample of people
People who are employed on temporary contracts, or working part-time (underemployed), may be hard to classify as either
What are the issues with the claimant count survey
Excludes many who might be looking for work, like over 60/ under 18
Very strict rules mean that you can lose your Jobseeker’s Allowance of you miss an interview or refuse to take certain jobs
Some people may claim benefits whilst still working in the “black market”
What are the economic costs of unemployment
Loss of earnings for the unemployed, leading to lower living standards
Stress and health problems of being unemployed
Increased government borrowing. With rising unemployment, the government spends more on unemployment and related benefits, and receives lower income from tax revenue
Negative multiplier effect, due to lower GDP
Increased social division between the un/employed
What is frictional unemployment
Caused by people moving between jobs
What is structural unemployment and the types
Structural: unemployment due to a mismatch of skills in the labour market
Occupational Immobility: Difficulties learning new skills applicable to a new industry
Geographical immobility: Difficulty in moving to where jobs are available
What determines the natural rate of unemployment
Quality of education
Geographical labour mobility
Flexibility of the labour market
Availability of job information
What are demand side policies to reduce unemployment
Expansionary fiscal and monetary policy to increase AD, but could cause inflation
What are the supply side policies to reduce unemployment
Education and training
Improved labour market flexibility (trade unions, easier to fire/ hire workers)
Lower benefits and higher taxes to incentivise the unemployed to work
Reducing the minimum wages to allow firms to employ more workers
Regional grants, these help firms to to set up in depressed areas to reduce geographical immobility
