2.1: Employment

• Who is considered to be unemployed?


  Someone who is not working but actively seeking work
• What is the labour force composed of?

  All workers actively working and the unemployed who are seeking work
• What age range typically defines the labour force?

  Usually between the ages of 16-65
• Who is included in the non-labour force?

  Those not seeking work, such as stay-at-home parents, pensioners, and school children
• What does it mean to be economically inactive?

  People between 16-65 who are not working or not seeking work
• How is unemployment measured in the UK?

  Using the International Labour Organisation (ILO) Survey and the Claimant Count
• What are the key differences between the ILO Labour Force Survey and the Claimant Count?

  • ILO Survey:
  • Extensive survey of ≈ 60,000 UK households quarterly
  • Respondents self-determine unemployment based on ILO criteria
  • Ready to work within two weeks and have looked for work in the past month
  • Useful for international comparisons
  • Claimant Count:
  • Counts people claiming job seekers allowance (JSA)
  • More stringent requirements for unemployment
  • Requires regular meetings with a 'work coach'
• What distinguishes underemployment from unemployment?

  Underemployed individuals are working but want more hours or are in jobs below their skill level
• What is a common cause of underemployment?

  It is often a response to cyclical unemployment
• What is structural unemployment?

  It occurs when there is a mismatch between jobs and skills in the economy
• What typically causes cyclical unemployment?

  A fall in aggregate demand (AD) in an economy
• What is seasonal unemployment?

  Unemployment that occurs when certain seasons end and labor is not required until the next season
• What is frictional unemployment?

  Unemployment that occurs when workers are between jobs, usually short-term
• What causes real wage unemployment?

  Wages being inflexible at a point higher than the free-market equilibrium wage
• How does migration affect employment in an economy?

  It can expand output by increasing the amount of labor available
• What is net migration?

  The difference between inward migration and outward migration
• How do immigrants impact the local job market?

  They often fill vacancies that local citizens cannot or will not fill
• What is a potential negative effect of immigration on unemployment?

  Immigrants may displace some local workers, increasing unemployment levels
• What are the effects of long-term unemployment?

  • Damaging impacts on individuals
  • Negative effects on the economy
  • Strain on government resources
  • Challenges for firms
• Types of unemployment

  Structural unemployment, Cylical unemplyment, Real-wage unemployment, Seasonal unemployment, and Frictional unemployment
• What is structural unemployment?

  unemployment occurs when there is a mismatch between jobs and skills in the economy
• What is cyclical unemployment?

  unemployment is caused by a fall in AD in an economyThis typically happens during a slow down or recession


  Unemployment caused by a fall in AD. Happens during a recession.