Economics Theme 2.1.3 Employment & Unemployment Exam Questions 6/10/12/15/20/25 markers

With reference to Extract B and Figure 1, discuss the likely impact of migration on employment and unemployment in the UK. (15 marks)

K= this is most likely to lead to an increase in employment (1 mark)

Application (2 marks)

Analyse- e migrants could fill those vacancies that cannot be filled by indigenous workers (2 marks)

Evaluation: so may only be shortterm migrants; also it is not sure they will remain in the UK after study (3 marks)

K= these migrants could displace the current indigenous workers

Application (2 mark)

Analyse: surplus labour in the market as they might attempt to join the labour market but with inappropriate skills (2 marks)

Evaluation: • Depends on the skills of migrants (3 marks)

With reference to Figure 3 and Extract 1, assess the likely effects of rising immigration for employment and unemployment in the UK. (12 marks)

K= Effects for employment (1 mark)

Application (1 mark)

Analyse: Increased size of population means that there is an increase in supply of labour, thus reducing wage rate and increasing demand for labour, so employment rises. (3 marks)

Evaluation: -Magnitude: only 41% coming for work - Magnitude of net immigration- 244,000 in the year ending March 2014 (2 marks)

K= Effects for unemployment (1 mark)

Application (1 mark)

Analyse: Increased immigration means more people looking for work so likely to increase unemployment - 41% of immigrants looking for work, hence could displace current employees (3 marks)

Evaluation: Depends on the skills of the immigrants (2 marks)

Evaluate government policies that could be used to increase the employment rate in the UK. (30 marks)

Diagram: Diagram showing AD shift and/or AS shift consistent with analysis (4); axes labelled (1), equilibria labelled (1), AD/AS lines labelled (1), correct shift (1). No marks for diagram if shift inconsistent with analysis

K= Investment in education and training to provide a more skilled workforce through increases in the level of human capital

Evaluation: Time lag (e.g. education takes a long time to have significant impact on productivity) and implementation lags

K= Reduction in minimum wage to encourage more firms to increase employment levels

Evaluation: Magnitude of the policy change (too low below equilibrium)

K- Reduction in unemployment and associated benefits to increase incentive to find work

Evaluation: Conflicts between the policies

K= Grants/tax breaks to firms encourage increases in employment

Evaluation: Government budget deficit and national debt make it difficult to pay for large investments or offer significant grants/tax breaks (2 marks)

Explain two possible problems for the UK economy of 35% of the unemployed being "out of work for more than 12 months" (Extract 2, lines 5-6) (8 marks)

K= • Loss of income and/or credit problems (such as house repossession) will have a downward pressure on consumption and AD, and therefore on output. It will have an upward pressure on unemployment.

K= • Loss of skills and other human capital: hard to get into or back into labour market and increased welfare problems for individuals and dependents and poverty issues, possibly leading to a reduction in the PPF and a downward pressure on actual and potential growth.

With reference to Figure 1 and Extracts 2 and 3, distinguish between the claimant count and ILO measure of Unemployment (6 marks)

Unemployment (ILO) up to 2 marks: • Actively looking for a job and out of work in last four weeks (1) • ready to work in two (1) • Questionnaire/interview (1)

App= (1 mark)

Claimant count up to 2 marks: • the number of people claiming/receiving (1) • JSA/dole/or unemployment related benefit (1)

App= (1 mark)

With Reference to Figure 1 and Extracts 2 and 3, outline two possible reasons why the trends in the claimant count rate and the ILO measure of unemployment differ after 2009. (8 marks)

K= Rise in youth unemployment (including 16 and 17 year olds) • It has become increasingly difficult to claim JSA • Stigma of collecting the JSA means that the unemployed will only collect it if they really can't find a job, whereas those who can manage without JSA

- (Application 1 marks)

K= In the LFS: • The underemployed might declare themselves unemployed on the LFS • Recession makes it more difficult for students to find part time work and so more likely to claim to be unemployed on LFS

(Application 1 marks)

With reference to the information and your own knowledge, examine two factors which might explain the rise in UK unemployment since 2008. (12 marks)

K= Fall in UK domestic demand in the recession causing more - unemployment generally

Evaluation: • Timing of the factors and their expected persistence

K= Decline in real incomes

• Global recession resulting in falling exports

Evaluation: • The relative impact of the factors

Explain why ILO unemployment is still expected to rise above 3 million even though 'the worst of the economic downturn is over' (6 marks)

Workers are not laid off immediately when sales fall because contracts are in place or for compassionate reasons (this may be two points).

• Cost of redundancy and recruitment • Fear that recovery will not be sustained, therefore lack of investment in recruitment and training

With reference to Figure 3 and Figure 4 Assess the significance of immigration for employment and unemployment. (14 marks)

Significance of immigration for employment: • 30% of immigrants have definite job - the immigrants may fill vacancies that cannot be filled by indigenous workers • Increased supply of labour might push down wages and average wage levels will fall. The demand for workers increases and employment increases • Increased consumer spending from increased population means more jobs are created (4 marks for one point or 2+2 marks or 3+1 mark) Significance of immigration for unemployment: • 12% of immigrants are looking for work or the 30% with jobs - these might displace current employees • Surplus labour in the market, e.g. friends and family, might attempt to join labour market but with inappropriate skills (4 marks for one point or 2+2 marks or 3+1 mark) The arguments in reverse are allowable in the context of falling immigration rates (shown in fig. 3) Evaluation 4 marks (2+2 marks or 3+1 mark): • Evidence might not be reliable - e.g. reason for immigration is a loaded question • It is not known whether those coming for 'formal study' are going to remain in the UK •The friends and family may or may not wish to join the labour market; they cannot be counted as unemployed unless they are willing and able to work in the next two weeks. Might have dependents. •Dependents may or may not have an effect •Net migration is a more significant figure

With reference to Figure 3, explain two costs of unemployment. (10 marks)

K= loss of income, credit problems such as house repossession, welfare problems for dependants, poverty issues

(2 application)

K= • loss of skills and other human capital: hard to get back into labour market

(2 application)