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Flashcards in unemployment Deck (43)
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1
Q

unemployment rate

A

§The percentage of the labour force that is unemployed.

2
Q

Labour force

A

The sum of employed and unemployed workers in the economy

3
Q

Discouraged workers:

A

People who are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them

4
Q

The Australian Bureau of Statistics (ABS) labour force survey

To be classified as employed, a person must have worked

A

only 1 hour or more in the week before the survey.

5
Q

The Australian Bureau of Statistics (ABS) labour force survey

Monthly sample of around 0.33% of the population aged 15 and over.

To be classified as unemployed,

A

a person must not have worked at all in the week before the survey, must have been actively looking for work in the past 4 weeks, and must be ready to start work immediately.

6
Q

what is the unemployment rate given by

A

labour force = employed + unemployed

7
Q

employment in australia

A
8
Q

what is the labour force participation rate given by

A
9
Q

Problems with measuring the unemployment rate

A
  1. The number of discouraged workers increases during a recession; therefore the official unemployment rate appears lower than it would otherwise be.
  2. Under-employed workers—people who work part-time but would like to work more hours.
  3. People who claim to be unemployed but are not can lead to the unemployment rate being overstated.
10
Q

Trends in labour force participation

The higher the participation rate,

A

the more labour is available and the higher the level of potential GDP

11
Q

How long are people usually unemployed?

A

§Around 50% of unemployed people found a job within 3 months, and 66% within 6 months.

12
Q

Long-term unemployed

A

§Those in the labour force who have been continuously unemployed for a year or longer.

13
Q

2014, Australia: Long-term unemployed

A

–2014, Australia: 22.2% of the unemployed were long-term unemployed.

14
Q

§The Australian economy creates and destroys hundreds of thousands of jobs every year.

how come

A

–New firms begin; existing firms expand.
–Some firms contract; some firms go out of business.

15
Q

§Job creation and destruction is a normal part of an economy and is due to changes in:

A

–consumer tastes, technological change, and entrepreneurial success and failure.

16
Q

The costs of unemployment

Costs to the economy

A

§Loss of gross domestic product.
§Loss or deterioration of human capital.
§Retraining costs.

§Costs to the government:
–Unemployment benefit payments –> federal budget.
–The opportunity cost of funds directed towards unemployment benefits.
–Loss of tax revenue—personal income tax, company tax, GST and excise taxes.

17
Q

costs of unemployment to the individual
§Loss of income.
§Loss of skills.
§Retraining costs.
§Loss of self-esteem.
§Social costs: Unemployment may contribute to family break-ups, health problems, mental illness, crime and political unrest.

A
18
Q

Unemployment rate by age, 2014.

The rate of unemployment is significantly higher among

A

among 15 – 19 year olds - 18.5% - than for any other group. In most societies, some demographic groups will be more vulnerable to unemployment than others. The graph shows young, unskilled people in Australia fall into this category.

19
Q

what is cyclical unemployment

A

: Unemployment caused by a business cycle contraction.
–Also known as ‘demand deficient’ unemployment.
§Falling sales lead to cut-backs on production and the sacking of workers.

20
Q

§When the economy begins to recover, the unemployment rate usually continues to rise for some time because:

A

–discouraged workers re-enter the workforce.
–some firms have excess capacity, and also want to wait to see if the recovery lasts before hiring new workers.

21
Q

Frictional unemployment

A

§Short-term unemployment arising from the process of matching workers with jobs; workers temporarily transitioning between jobs
–School leavers, college and university graduates looking for their first job.
–People re-entering the workforce after an absence.
–People who have lost or quit their job and are looking for their new job.

22
Q

Seasonal unemployment

A

Seasonal unemployment

23
Q

Some frictional unemployment is good for the economy because

A

–it means that workers and employers are taking the time necessary to match worker attributes with job characteristics.
–new workers with skills (graduates) are entering the labour force.

24
Q

Structural unemployment

A

§Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs; skills are obsolete
e.g. new technology and changes in consumer tastes may make some workers redundant

25
Q

Full employment

A

§Economists say that full employment occurs where there is no cyclical unemployment.
§At full employment the ‘normal’ types of unemployment still exist—frictional and structural.

26
Q

Natural rate of unemployment:

A

§The unemployment rate that exists when the economy is operating at potential GDP.

amount of employment when economy is at full employment. 5%

If current unemployment is 9%, there must be some cyclical unemployment

27
Q

Non-accelerating inflation rate of unemployment (NAIRU):

A

The level of unemployment below which the rate of inflation will rise.

28
Q

Government policies and the unemployment rate

A

§Most job search is carried out privately.
Government policies can help to reduce structural unemployment through retraining programs

29
Q

Government policies and the unemployment rate

Job Services Australia:

A

§A national network of private and community recruitment agencies that find jobs for unemployed people and other job seekers.

30
Q

Social security and other payments to the unemployed

These may have two main effects:

A
  1. Allow more time for job search and therefore improve labour market efficiency.
  2. Reduce the opportunity cost of unemployment and therefore lead to longer periods of unemployment.
31
Q

what was was the dominant form of wage determination in the early 1980s

A

§Compulsory arbitration: Tribunals determined minimum pay rates and working conditions of employees in awards.
–Australian Industrial Relations Commission (AIRC).

32
Q

§in the 1990s and early 2000s.Australia moved from a

A

highly centralised wage and industrial relations system (most of the 20th century) to a relatively deregulated system

1991: AIRC encouraged enterprise bargaining

33
Q

From 1991 onwards

A

§Enterprise bargaining: Wages and working conditions negotiations between employers and unions or employers and employees at the workplace level.
–Encouraged by the AIRC from 1991 onwards.
By 2006, about half of all employees in the federal jurisdiction were on an enterprise agreement

34
Q

Labour market regulation and deregulation

2006:

A

§Further deregulation through the Workplace Relations Amendment (WorkChoices) Act 2006.
§Some re-regulation occurred post-2007 with the change in federal government. WorkChoices legislation abolished.

35
Q

Advantages of deregulation:

A

§Flexible work arrangements may reduce frictional and structural unemployment.
§Improved performance can be rewarded with higher wages.

36
Q

Disadvantages of deregulation:

A

§Individual work contracts may reduce individual bargaining power between workers and employers.
§Increased labour market flexibility may cause a decline in the position of low-paid workers.

37
Q

Minimum wages

A

§The majority of workers in Australia are ‘covered’ by minimum wage laws.
–Most workers earn wages that are much higher than the minimum wage.
Minimum wage laws increase the wages of the lowest paid

38
Q

Economists argue over the effect minimum wages may have on employment

A

–Some argue that they have little or no effect on employment.
–Others argue that minimum wages reduce employment among the low paid, as more people would have been employed if wages were lower.

39
Q

Trade unions are

A

organisations of workers that bargain with employers for higher wages and better working conditions for their members.

40
Q

trade unions trend

A

–In earlier times, many Australian workers belonged to unions.
–In 2014, only about 18% of the Australian workforce belonged to unions.

41
Q

Unions may improve

A

working conditions and pay for their members. In doing so, they also increase employer costs, which may reduce employment

42
Q

Efficiency wage:

A

§: A higher-than-market wage paid by a firm to increase worker productivity.
–May reduce the need for worker monitoring.
–May provide motivation for more productive work.
–But, efficiency wages increase the labour supply, so may increase unemployment.

43
Q

Why did Henry Ford pay his workers twice as much as other car manufacturers?

A

Henry Ford claimed that paying a wage twice as high as his competitors was the best cost-cutting move he ever made.