| unemployment | someone must be of working age, willing and able to work and actively seeking work but cannot find a job.
Labour force survey and claimant count. |
| The national rate of unemployment can hide: | 1. Regional variations
2. Local variations
3. Variations in unemployment by age, gender, ethnicity and other social backgrounds
4. Doesn’t tell us how long someone has been jobless. |
| long term unemployment | if someone has been out of work for 12m or more. |
| the longer ur out of a job the harder it is to.. | find one |
| structural supply side unemployment | macroeconomic concept that contends that increases in the supply of goods lead to economic growth. |
| rate of unemployment | The rate of unemployment is a key macroeconomic objective for any government. So too bringing down the average duration of unemployment. The economic and social costs of unemployment rise the longer someone remains out of work. |
| when Does mass unemployment occur | exists when officially one person in ten in the labour force is out of work. |
| why is youth unemployment high | 1. Lack of experience
2. Lack of education or training
3. Age discrimination
4. Economic downturns – when the economy is struggling, young ppl are often to be laid off first or have their hours reduced.
5. Automation and tech advancements |
| discouraged workers | they’re ppl who have ceased to seek work bc they believe there’s no suitable available jobs. |
| are unemployment figures inaccurate | 1. LFS is intended to be a representative of the entire population of the UK, but there’s always a scope for sample error (but sample size is high)
2. Measured unemployment excludes the economically inactive – there’s often complex reasons for ppl not searching for work
3. Unemployment is not the same as under employment
4. In all countries, there’s disguised hidden employment with many ppl working in informal labour markets. |
| gig economy | segment of the service economy based on flexible, temporary, or freelance jobs, involving connecting clients and customers thru an online platform. It linked to zero hour contracts. |
| seasonal unemployment | – seasonal workers might be without paid jobs due to the time of yr when theres seasonal changes in demand, production and employment. |
| frictional unemployment | – caused by workers seeking a better job or who are between jobs. Affects ppl who are new entrants to the labour market such as school leavers and college / university graduates. It affects ppl who are on short term employment contracts. |
| how can frictional unemployment be reduced | by making info on jobs more available and making job search more affordable via cheaper transport or subsidies. |
| causes of frictional unemployment | 1. School and college leavers entering labour market
2. People searching for work following a career change
3. Early retired coming back to the labour market
4. Mothers returning to active job search
5. Incomplete info can hamper job search
6. Ppl on short term contracts. |
| 2 reasons foe higher levels of job vacancies in uk | 1. brexit
2. skills gaps and low pay |
| structural unemployment | 1. Unemployment caused by lack of suitable skills for jobs available; a result of de-industrialisation or other structural changes in an economy
2. Often ppl stay unemployed bc of disincentive effects from the tax and welfare system
3. Can happen bc of other barriers to ppl finding work . |
| causes of structural unemployment | 1. New jobs require new skills
2. Unaffordable housing
3. Employer discrimination
4. Erosion of skills
5. AI |
| unemployment trap | = the situation where people who are unemployed have difficulty finding work because of structural barriers that make it difficult for them to secure employment |
| human capital | – refers to the knowledge, skills, and abilities that ppl have that enable them to produce goods and services.
Improving human capital is critical to reducing structural unemployment |
| cyclical unemployment | = involuntary unemployment due to a lack of ad for goods and services. This is also known as Keynesian unemployment or demand deficient unemployment. |
| volinatary unemployment | this occurs when ppl choose not to work for various reasons, even though suitable job opportunities are available to them. |
| involuntary unemployment | – when individuals want to work and are actively seeking employment but are unable to find suitable job opportunities or are temporarily laid off from work. |
| whats cyclical unemployment due to | lack of demand, labour shedding, or when there's spare productive capacity |
| real wage unemployment | – it’s the idea that unemployment is caused by wages being too high relative to the productivity of workers.
Employers are unwilling to hire workers at the current wage level bc they believe the workers aren’t worth that much.
This can occur when labour supply exceeds labour demand, or when theres a surplus of workers in a particular industry. |
| real wage rigidity | – happens when workers are reluctant to see their real wages fall during an economic downturn. Real wages drop when nominal wages don’t rise as fast as prices.
Wages can be sticky it slow to adjust downward bc of long term labour contracts, trade union collective bargaining agreements, and social norms about fair pay. |
| natural rate of unemployment | – level of unemployment that exists in an economy when its operating at full potential or in a state of long term equilibrium. |
| economic inactivity | – ppl of working age but but who aren’t in work, who have not been looking for a job within the last 4 weeks. |
| 2 policies that help reduce economic inactivity | 1. Improving financial incentives
2. Investment in human capital and labour market flexibility |
| consequences of high unemployment | 1. Unemployment is a waste of scarce labour resources
2. Leads to lost output, slower growth and potentially a reduction in a country’s potential trend rate of growth (due to economic scarring)
3. Large fiscal costs for the gov with higher welfare spending and reduced tax revenue
4. High long term unemployment can worsen income inequality
5. Symptom of a range of labour market failures. |
| economic costs of high unemployment | 1. Lost output and productivity
2. Reduced customer spending
3. Lower tax revenue
4. Increased gov spending on welfare benefits. |
| social costs of high unemployment | Social costs of high unemployment:
1. Decreased self-esteem and mental health
2. Family breakdown
3. Reduced social mobility
4. Increased inequality |
| economic scarring | to the medium long-term damage done to the economies of one or more countries following a severe economic shock which then leads to a recession. |
| reasons for scarring | • Fall in investment leading to an ageing of the existing capital shock
• Rise in long term unemployment and economic activity
• Increase in business failure
• Shrinkage in the capacity of financial system to lend. |
| consequences of high unemployment | 1. Loss of work experience
2. Loss of current and duture income
3. Changing pattern of jobs in the economy. |
| ppl counted for underemployment | 1. Looking for an extra job or actively searching for a new job with longer hrs to replace their current main job
2. They prefer to work longer hours in their present job
3. Under employment also means that workers are under utilized in terms of their ability, formal qualifications and experience. |
| equilibrium theories believe | perfect marker there would only be frictional employment |
| disequilibrium theorists | market would not automatically reach equilibrium bcc wages rarely fall |
| equliberium theory | supply side problem, workers refuse to work as they can receive unemployment benefits and unemployment is volentary |
| disequilibrium theory | the economy will not achieve equilibrium, reduction in demand for goods means workers will be made redundant and unemployment is involuntary. |
