Essay on Econ Revision Guide

Submitted By eashankaradia
Words: 2771
Pages: 12

Unemployment
Definition:

Unemployment means that scarce human resources are not being used to produce goods and services to meet people's needs and wants. The unemployed are people able, available and willing to work at the going wage rate but cannot find a job despite an active search for work.

Claimant Count:

* The claimant count measure includes people who are eligible to claim the Job Seeker's Allowance. * The data is adjusted seasonally to take into account predictable seasonal changes in the demand for labour.

Labour Force Survey:

* The Labour Force Survey counts those who are without any kind of job including part time work but who have looked for work in the past month and are able to start work immediately. * The figure includes those people who have found a job and are waiting to start in the next few weeks.

Since 2000 on average the labour force survey measure has exceeded the claimant count by around 500,000. Since 2000 the Labour Force Survey and Claimant Count has reached its highest point at the end of 1992, with the Labour Force Measure at 10.8% of the labour force and the Claimant Count at 9.9%. They were both at their lowest at the beginning of 2008, with the Labour Force Survey at 5.3% of the labour force and Claimant Count at 2.6%.

Cyclical Unemployment:

* Cyclical unemployment is involuntary unemployment due to a lack of demand for goods and services. This is also known as Keynesian unemployment or demand-efficient unemployment. * This mainly happens when there is a recession or a steep slowdown in growth, we see a rising unemployment because of business failures and redundancies. When there is a significant decrease in growth firms are likely to reduce employment to cut costs, this is known as "labour shredding". * An example of cyclical unemployment would be the mining industry in Australia. The mining industry in this country is highly dependent on demand from China. If this demand falls the number of miners required will fall and this will cause unemployment through redundancies.

Frictional Unemployment:

* Frictional unemployment is transitional unemployment as people move between jobs. For example newly-redundant workers or people joining the labour market for the first time such as university graduates may take time searching to find work they want at wage rates they are prepared to accept. * This can be caused due to imperfect information meaning the jobless are unaware of the available jobs. * This could also be due to incentives problems as some people may stay out of work if they believe the tax and benefit system leaves them little or no better off from taking a job. * Frictional unemployment happens when it takes time for a country's labour market to match the available jobs.

Seasonal Unemployment:

* Seasonal unemployment occurs due to lack of demand for goods and services at specific times of the year. * A good example of this would be a ski instructor in the summer. Due to the lack of snow, as ski instructor will be out of work, however a job will become more available in the winter when there is snow around. Other examples include tourism in the winter for coastal attractions.

Structural Unemployment:

* Structural unemployment happens when there is a long-term decline in demand in an industry leading to fewer jobs being available as the demand for labour falls away – this leads to a decline in employment in a particular industry or a particular occupation. * Examples would include jobs on a production line being replaced by robots on a car production line for example and unemployment caused by foreign competition.

Consequences of Unemployment:

High unemployment is widely recognised to create costs for individuals and for the economy as a whole. Some of these costs are difficult to value and measure, especially the longer-term social costs.
1. Loss of income: Unemployment normally…