Unemployment and the Australian Labour Market

Flashcards covering the main types of unemployment (Structural, Cyclical, Frictional, Seasonal, Hidden, Hardcore, Underemployment), measurement formulas, historical trends in the Australian labour market, and the concept of NAIRU.

What is Structural Unemployment?

Unemployment caused by changes in technology or structural changes in the economy, resulting in a mismatch between the skills workers provide and the skills needed by emerging industries.

What causes Cyclical unemployment?

Downturns in the level of economic activity (the business cycle), where a fall in demand for goods and services leads to firms reducing production and labour demand.

What is Frictional unemployment?

The inevitable unemployment that occurs when people are temporarily unemployed as they change jobs.

According to the Australian Treasury, where is frictional unemployment highest?

Amongst lower-skilled jobs and in some remote areas such as Darwin.

What is Seasonal unemployment?

Unemployment occurring at predictable and regular times throughout the year due to the nature of certain work, such as selling gelato or shopping mall Santa Clauses.

Define Hidden unemployment.

Refers to people who do not have a job but do not fit the official definition of unemployment, such as those who are no longer actively seeking employment due to personal reasons.

What is the definition of Underemployment?

Refers to people who work less than full time ($35$ hours per week) but wish to work more hours.

How long must a person be out of work to be classified as experiencing Long-term unemployment?

For $12+$ months, usually as a result of structural unemployment.

What is Hardcore unemployment?

Unemployment involving people out of work for so long they are considered unemployable due to personal circumstances like mental illness, disability, drug use, or criminal behavior.

In Australia, what determines the 'Working age population'?

People over the age of $15$.

Define the 'Labour Force' according to the lecture notes.

The section of people over $15$ who are either working or actively seeking work.

What is the formula for the Labour Force?

$$\text{Labour Force} = \text{Employed} + \text{Unemployed}$$

What is the formula for the Labour Force Participation Rate?

$$\frac{\text{Labour Force}}{\text{Working age population}} \times 100$$

What is the formula for the Unemployment Rate?

$$\frac{\text{Number of persons unemployed}}{\text{Total Labour Force}} \times 100$$

How is the Labour underutilisation rate calculated?

$$\text{Unemployment rate} + \text{Underemployment rate}$$

What happened to the female Labour Force participation rate between 1990 and 2024?

It jumped from $52.2\%$ in 1990 to $62.7\%$ in 2024.

How has the job share of the manufacturing sector changed in Australia between 1990 and 2024?

It fell from $14\%$ of jobs in 1990 to $6.4\%$ in 2024.

Which 5 service industries have driven Australian job growth?

Health care, professional services, construction, education, and hospitality.

According to the IMF's 2024 report, what percentage of jobs in advanced economies will be affected by AI?

$60\%$.

What is the NAIRU (Non-accelerating inflation rate of unemployment)?

The level of unemployment at which there is no cyclical unemployment, representing the natural level of inevitable unemployment.

What is the estimated NAIRU benchmark for Australia?

$4-5\%$.

What is the formula for Total Unemployment in relation to the NAIRU?

$$\text{Total unemployment} = \text{NAIRU} + \text{Cyclical unemployment}$$