27 - Unemployment

Unemployment

when those actively seeking work are unable to find a job

Economically inactive

Does not look for a job and does not have a job

How is unemployment measured?

SURVEY: Labour Force Survey in UK

(ILO defined unemployment)

Types of unemployment

Cyclical or demand deficient

Seasonal

Voluntary

Frictional

Structural

Cyclical or demand deficient unemployment

Unemployment caused by falling demand as a result of a downturn in the economic cycle

Seasonal unemployment

Unemployment caused when seasonal workers, such as those in the holiday industry, are laid off because the season has ended

Voluntary unemployment

Unemployment resulting from people choosing not to work

Frictional unemployment

When workers are unemployed for a short period of time as they move from one job to another

Structural unemployment

Unemployment caused by changes in the structure of the economy, such as the decline in an industry (3 types: sectorial, technological and regional)

Laying off

To stop employing someone, no work for them to do

Unemployment impacts

Lower output

Rise in poverty

Tax revenue falls

Debt rises

Scarce resources

Consumer confidence falls

Government spends more money on benefits (opp cost)

Psychologically hard for society