Unemployment

• The Phillips curve shows the inverse relationship between unemployment and wage inflation.
• Unemployment refers to a person of working age, willing and able to work and actively seeking a job but cannot find a job.
• ILO's defnition of those who are employed is that they must be looking for 4 weeks and willing to work within 2 weeks.
• 2 ways of measuring the unemployed: Labour Force Survey and the Claimant Count.
• The Labour Force Survey gets a 60% response rate.
• The Labour Force Survey asks households to classify themselves as employed, unemployed or inactive.
• The Claimant count counts the number of people under the Job Seekers Allowance (JSA). This is easier to collect but not everyone gets the benefits.
• The 4 types of unemployment is seasonal, structural, frictional and cyclical.
• Structural unemployment is when skills are no longer required and the pattern of labour demand changes/
• Frictional unemployment is the gap between moving from one job to the next.
• Cyclical unemployment is a fall in the AD which leads to firms firing.
• Economic costs of unemployment is:

  • Loss of output
  • Reduced consumer spending
  • Lower tax revenues.
• Social costs of unemployment is:

  • It decreases self esteem
  • Reduces social mobility
  • Increases inequality.
• Unemployment can be decreased using supply side policies of increasing education or demand side with monetary and fiscal policy.
• Economically active people are employed and unemployed workers.
• Economically inactive people are not looking for work which include the retired, disabled or those below the working age.
• Hysteresis refers to the unemployment rates still rising even after the economy has recovered. It still persists into the future and there is a lag between input and output.
• Mass unemployment refers to officially, 1 out of 10 are out of the workforce.
• Youth unemployment refers to the measured unemployment rate for all 16-24 year olds.
• Discouraged workers are inactive work seekers who have given up looking for work.
• Hidden unemployment refers to people who have work but are not on government reports.
• The gig economy are workers who are self employed through zero hour contracts and have little job security.