Employment and unemployment

19 flashcards · Economics · by Addaneye

1. Economically active (labour force) definition

   Those people who are at work or who are willing to work. Also called the workforce, the term includes unemployed people

2. Economically inactive definition

   Those people who are not available for work, and unable to work

3. Employment formula

   (number of people in work/total number of economically active people) * 100

4. Unemployment formula

   (number of people out of work/total number of economically active people) * 100

5. What are the types of unemployment

   Cyclical Structural Frictional Seasonal Classical or real wage inflexibility

6. What is cyclical unemployment?

   Where lack of spending in the economy/recession means that people who are out of work

7. What is structural unemployment?

   Where industries are in decline and workers' skills are becoming obsolete

8. What is frictional unemployment?

   Where people are in between jobs

9. What is seasonal unemployment?

   Where people are out of work for some periods of the year

10. What is classical or real wage inflexibility?

    Where there are problems with the supply side of labour, e.g. minimum wage is too high

11. What are some costs of unemployment?

    Costs to person without income Non-income costs to the unemployed - skills become obsolete, people lose confidence Costs to firms - decrease in spending Costs to governments - JSA, they receive less from taxes

12. What is jobseeker's allowance (JSA)?

    A payment made to people who are willing and able to work but are not currently in employment

13. Measures of unemployment (1)

    ILO measure - uses a questionnaire to ask people aged 16-65 whether they have been out of work over the last weeks and are ready to start within 2 weeks

14. Measures of unemployment (2)

    Claimant count - records people who are successfully claiming jobseeker's allowance

15. Difference between unemployment and underemployment?

    Unemployed people don't have a job however underemployed people have jobs which don't offer them enough hours

16. Significance of increased employment

    increased incomes Improved skills (human capital) Multiplier effects - increased incomes --> increased spen Higher government taxation revenue

17. Significance of decreased unemployment and inactivity

    Falling government spending on JSA and other benefits Exponential benefits as people out of the job market become increasingly unemployable Job market becomes more flexible (more workers to choose from)

18. When might migration occur?

    searching for work study abroad escape from social or political problems accompany family members disagree with tax structures

19. Effects of migration on employment and unemployment?

    If immigrants come into a country to fill in vacancies then employment would increase If immigrants are looking for work and either do not find it or displace other people, then it employment may be unchanged and unemployment may worsen