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Economics - 2.1.3 - Employment and Unemployment - A Level
Terms in this set (42)
The percentage of the labour force which is not in work, but seeking work
The percentage of the working age population which is in employment
The situation where someone is counted as employed, but not to their full potential, so they are looking for a better job, or are not earning as much as they like. This can mean they are part time or not working as skilled a job as they could.
Underemployment's affect on the unemployment rate
Underemployment leads to the unemployment rate understating the true unemployment and underemployment picture.
Workers who work only a fraction of the hours that a full-time employee would work
The portion of the population between the statutory school leaving age and the state retirement age.
Historic working-age population in the UK
The population between the ages of 16-65, though the state pensionable age is rising as people live longer
The portion of the working-age population who are able and willing to work and who are either in work, or are actively seeking employment. It is comprised of both the employed and the unemployed
The portion of the working-age population who are either unable, or unwilling, to work and who are therefore not a part of the labour force. The economically inactive includes full-time carers and homemakers (housewives and househusbands), students, those unable to work, or other people who have taken themselves out of the labour force.
The proportion of the working-age population represented by the labour force. This is an indicator of what proportion of a nation's potential labour force is actively participating (or attempting to) in the generation of economic output.
Other name for participation rate
There will always be some natural unemployment present in the economy, but we do achieve full employment if there is no cyclical unemployment present in the economy.
Natural rate of unemployment
Where there is no cyclical employment but some structural and frictional unemployment
Natural rate of unemployment in US
Around 4-6% (normative figure due to impossibility of classifying all unemployment)
Types of natural unemployment
Frictional and structural unemployment
The situation of being unemployed for over 12 months
A situation where prolonged unemployment leads to the loss of skills, and also leads to individuals becoming discouraged that they may find work. This can lead to individuals leaving the labour force and becoming economically inactive.
Discouraged workers in terms of employment
Discouraged workers are workers who stop looking for work because they believe they won't get a job. (links to hysteresis). This is because they are not in Labour Force any more. They are no longer counted as unemployed.
The headcount of those people claiming unemployment benefits. This is one method of measuring the number of people who are unemployed.
International Labour Organization (ILO)
UN body ensuring workers' rights across the globe
Labour Force Survey
A survey, conducted in the UK by the Office for National Statistics (ONS), of the employment circumstances of the UK economy, which gives another measure of the number of those who are unemployed.
Unemployment vs underemployment
Unemployment is when someone does not have a job, but underemployment is when someone does have a job but is not being used to their full potential (e.g. they are part time, overqualified)
Changes in rates of unemployment, inactivity rate, and employment
Decreasing rates of unemployment and inactivity rate and increasing rates of employment increase GDP
Unemployment due to a worker becoming obsolete, i.e. a machine replacing a worker, or a worker who was skilled in a certain area, which has become obsolete as a whole (an obsolete industry)
Example of structural unemployment
A VCR repair person, shipbuilding in the North East UK
Unemployment that arises when people are moving between jobs or when they enter the workforce for the first time
Example of frictional unemployment
Just left university at working age
Unemployment caused by seasonal industries
Example of seasonal unemployment
The tourist industry, which uptakes more workers in the summer and lays them off in the winter.
Unemployment due to economic weakness (such as a recession or slow-down phase in the economy). The only type of unemployment that is unnecessary in a well functioning economy.
Another name for cyclical unemployment
Real Wage unemployment
Real wages (i.e. wages adjusted for inflation), for a number of reasons, are not able to fall low enough for the supply of potential labour market to meet demand for labour. Therefore, there is an amount of labour which is not in demand (i.e. real wage unemployment).
Another name for real wage unemployment
Reasons for real wage unemployment
The national minimum wage (NMW) and also, existence of unemployment benefits (which de-incentivise unemployed from taking low-wage jobs).
Effects of migration on unemployment
Often immigrants bring benefits, such as skills. However, it has been argued that they increase competition for lower paying jobs, increasing unemployment without compensating by injecting into the circular flow of income, e.g. sending money back to home countries.
Effects of unemployment on standards of living
Standard of living are probably lower for those who are unemployed.
Effects of unemployment on output
Unemployment causes production below the economy's maximum potential output. This has implications for the economy's efficiency.
Effects of unemployment on utilisation of resources
Economic inactivity drags down the maximum potential output of the economy, due to non-maximal utilisation of labour as a factor of production.
Effects of unemployment on output
The other problems caused by unemployment all bring down the total output of the economy, meaning fewer goods & services for everyone in society to enjoy.
Effects of unemployment on the government
The government receives less in taxes, and in welfare states must pay out money to the unemployed, increasing government expenditure while decreasing taxes, increasing the defecit
Effects of unemployment on firms
Labour could theoretically be more competitive, driving down costs for firms. However, reduced consumer demand as people lose jobs can also harm firms.
Effects of unemployment on society
Unemployment leads to increased rates of crime and poverty, as well as increased death rates.
THIS SET IS OFTEN IN FOLDERS WITH...
Edexcel A-level Economics Theme 2
Edexcel A-level Economics Theme 1
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Edexcel A-level Economics Theme 4
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