Economics - Unit 11: Unemployment

Define the labor force.

The working population, including people of working age who are able and willing to work.

What is the labor participation rate?

The percentage of the working-age population that is either in work or looking for work.

Define employment.

People with jobs.

Define unemployment.

People without jobs but who are able to and actively looking for jobs.

Describe frictional unemployment.

Occurs when workers leave one job and spend time looking for another.

Describe structural unemployment.

Occurs when an industry in an economy closes down due to lack of demand, or relocation of production to another region.

What is technological unemployment?

Unemployment arising from technological advancement, where technology replaces workers.

What is seasonal unemployment?

Unemployment that occurs because the consumer demand for a certain good or service is seasonal.

What is cyclical unemployment?

Unemployment that occurs when there is a drop in demand for goods/services during an economic recession.

What is natural unemployment?

The level of unemployment that exists when the economy is doing well; all types of unemployment except cyclical.

Name some causes of disequilibrium in the labor market.

Economic recession, rise in cost of other factor inputs, technological advancement, unemployment benefits, powerful trade unions & minimum wage legislation, lack of job information, and lack of labor mobility.

What are some consequences of unemployment on individuals?

Loss of income, loss of working skills, and broken families.

What are some consequences of unemployment for the government?

Larger expenses on benefits, drop in tax revenue, and cuts in other public expenditure.

What are some consequences of unemployment for the economy?

Waste of resources, lower output level, and tax revenue used to pay for benefits.

Describe occupational immobility.

Workers lacking the necessary skills to switch to new jobs.

Describe geographical immobility.

Workers being unwilling or finding it difficult to move to new locations for jobs.