[2.1.1c.] Economics - Unemployment

What is unemployment?

When people in the labor force are willing and able to work but cannot find a job despite actively searching for one.

What is the level of unemployment?

The number of people who are unemployed.

What is the rate of unemployment?

The percentage of people who are unemployed as a percentage of the labour force.

(level of unemployment)/(total labour force) x 100

What is the claimant count?

A method of measuring unemployment whereby the number of people claiming Job Seeker's Allowance (government pays them to actively look for a job) is measured.

What are some of the disadvantages of the claimant count?

Not everyone eligible signs on to receive job seeker's allowance

Self employed workers temporarily unemployed often don't claim.

U18 and 60+ don't count.

What is the labour force survey?

A method of measuring unemployment where a survey is conducted in every household studying the employment circumstances of that household.

What are the benefits of the labour force survey?

Internationally recognised

Has potential for data analysis

Picks up trends in sectors

Better guide for policy makers

More accurate

What is the difference between dismissal and redundancy?

Dismissal is when a worker loses a job to their own fault.

Redundancy is when job loss occurs for no reason of a worker's own.

What is cyclical unemployment?

Unemployment that occurs as a result of the cyclical nature of the economy (often happens during a recession).

What are the effects of cyclical unemployment?

Highly skilled and highly specialized workers may lose their jobs as demand for luxury products fall.

Often these workers get rehired during a boom.

What is structural unemployment?

Unemployment that occurs when there is a mismatch between the skills of the worker and what the economy needs causing workers to need to retrain.

What are some of the causes of structural unemployment?

Industry is gone or declined (e.g. if you are a coal miner and all of the mines shut down there is a mismatch and you need to retain)

Workers are unskilled

Technology advances and replaces jobs (potentially like AI)

What is seasonal unemployment?

Unemployment that occurs as a result of when seasonal industries fall out of demand e.g. farming, leisure, tourism etc

What is frictional unemployment?

The short term unemployment that occurs as workers move between jobs.

Why does frictional unemployment occur?

Career moves

Geographical changes

Seasonal unemployment (if someone is seasonally unemployed they are likely to search for a new job)

Structural unemployment

etc.

What is voluntary unemployment?

When people choose not to work voluntarily.

What may encourage someone to become voluntarily unemployed?

They do not want to supply their labour at the current wage rate

They just do not want to work