unemployment - 2.1.3

    Cards (19)

    • unemployment
      number of people able, willing and actively seeking work
    • underemployment
      situation where people are working fewer hours than they wished. also refers to jobs where one doesn't fully utilise their skills e.g a graduate working in mcdonalds
    • measures of unemployment
      claimant count
      labour force survey and the international labour organisation
    • causes of unemployment
      structural, frictional, seasonal, cyclical and real wage inflexibility unemployment
    • structural unemployment
      when workers do not have the right skills or qualifications for jobs in the economy
    • seasonal unemployment
      when people are unemployed at particular times of the year
      e.g ski resort in summer
    • cyclical unemployment
      unemployment caused by the lack of demand for goods and services e.g during reccessions
    • frictional unemployment
      unemployment caused by people moving between jobs
      e.g finding a better job - that pays more/ closer to home
    • real wage inflexibility
      when wages are above equilibrium - high supply of workers but low demand of g/s
    • significance of changes in the rates of employment
      higher profit for firms - businesses expand, more jobs, increased tax rev to government and so higher standard of living
      higher gov taxation - increase in tax revenue, improving standard of living
    • significance of changes in the rates of unemployment
      decrease in gov spending on benefits
      demand pull inflation, higher employment, higher incomes, increase in consumption
      higher cost pull inflation - firms offer higher wages to attract the best workers which increases their cost and so they put the increased cost in prices of goods/services (rise in the cost of production)
    • significance of changes in the rates of inactivity
      more dependant of welfare benefits - dependency ratio increases
      long term growth falls
    • significance of migration of unemployment and employment
      brings skilled workers, increases the workforce and fills job vacancies - increases employment
      competition for jobs increases - increases unemployment
    • significance of skills in unemployment and employment
    • effects of unemployment for consumers
      lower prices - reduces inflation and increase disposable income
      reduces disposable income, fall in unemployment and so fall in the standard of living
      crime - worsen budget deficit - opportunity cost, more money spent on police
      fall in consumer sovereignty - fall in labour productivity, fewer goods and services and fall in consumer choice
    • effects of unemployment on firms
    • effects of unemployment on workers
      loss of earnings, low standard of living
      hysteresis effect - temporary periods of unemployment could be permanent, workers may find it difficult to find a job in the future to loss of skills
    • effects of unemployment on the government
      lower gov revenue - less tax revenue due to loss of jobs, less money to public services which decreases standard of living
      more money to welfare benefits as more people are unemployed - increases dependency ratio
      higher gov borrowing - to finance welfare benefits since tax revenue decreases they borrow, increases national debt and higher budget deficit
    • effects of unemployment on economy/society
      inflation decreases, lower income, less consumption and so reduces demand pull inflation pressure
      lower growth, less productivity due to lower consumer income and so demand falls so firms cut wages and fire people - they wont be able to expand, less jobs available
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