Economics unit 2 - Low unemployment

Employment

When people who are willing and able to work can find a job

Unemployment

When people who are willing and able to work cannot find a job

Economically inactive

People who are of working age and are not working

How is the level of unemployment measured

Claimant Count

Claimant count

A measurement of unemployment using the number of people who claim unemployment - related benefits

Level of unemployment

The total number of people who are in the workforce without a job

Unemployment rate

The percentage of the country’s workforce that is unemployed

Unemployment rate

(number of unemployed/ workforce) x 100

Types of unemployment

Cyclical unemployment, frictional unemployment, seasonal unemployment, structural unemployment

Cyclical unemployment

Workers without employment due to a fall in total demand for goods and services

Frictional unemployment

Workers without employment as they move from one job to another

Seasonal unemployment

Workers without employment due to a decrease in demand at certain times of a year

Structural unemployment

Workers without employment due to the decline of an industry

Benefits for unemployment

Easier to recruit as more people looking for work, Increases international competitiveness as workers may accept a lower wage rate to work, Lower inflation due to a fall in demand

Cost of unemployment: workers

Lower SOL due to less income, Excluded workers - due to lack of skills, less public services due to a fall in tax revenue, tax increases to make up for the lost tax tax revenue

Cost of unemployment: government

Lower output then potential, budget deficit due to lower tax revenue, cycle of increasing unemployment

Cost of unemployment: regions

Lower regional standard of living