unemployment

chapter 9

blue collar

workers perform manural labour or skilled trade, often paid hourly

white collar

perform administrative, professional or managerial tasks, typically in office settings and salary earning

who does the labour force belong to

employed or unemployed individuals

economically active population

unemployed individuals that are part of the labour force that are actively seeking for employment

economically inactive population

unemployed individuals that are discouraged and don’t actively seek out unemployment, but have a desire to work

name the types of unemployment

frictional, seasonal/cyclical and structural

frictional unemployment

individuals who are between jobs but have the skills to be employed

what are the causes of frictional unemployment

• quitting a job to find better opportunities

• being laid off due to economic restructuring

• entering the workforce for the first time or moving to a new city

government actions (frictional unemployment)

• providing job training and placement services

• reducing the stigma associated with unemployment

seasonal unemployment

unemployment during specific times of the year

what are the consequences of seasonal unemployment

loss of income and limited opprotunities to gain experience

government actions (seasonal)

• unemployment benefits

• job training and reskilling programs

structural unemployment

workers’ skills and experience no longer match available jobs

causes of structural unemployment

driven by long-term shifts in the economy, e.g. technological change, economic restructuring, globalisation

government actions (structural)

• job training and reskilling programs

• support for worker relocation

• investment in emerging industries

participation rate =

labour force/working age population

unemployment rate =

unemployed/labour force

absorption rate =

employed/labour force

what are criticisms of the unemployment rate

• counts any work at all as employment

• does not consider the type or quality of work

• very low-paying jobs still count as employment

• discouraged workers

discouraged worker

a person who was not employed during the survey period and wanted to work, however are not actively seeking work in the last 4 weeks

what are the costs of unemployment

• loss of income

• psychological impact

• experience gap

• limited support

• missed development

• risky survival strategies

what are economic measures to counter the negative effects of unemployment

unemployment insurance fund (UIF)

why is the UIF necessary but not sufficient

because it needs to be extensive and well-developed

what are the assumptions of a purely competitive labour market

• numerous firms compete with one another in hiring labour

• each of many qualified workers with identical skills supplies labour

• individual firms and workers are ‘wage takers’