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What is employment?
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What is employment?
Employment is the economic use of labour as a factor of production.
Define the term unemployment.
Unemployment is when someone is not working but actively seeking work.
What is the labour force?
The labour force consists of all workers actively working plus the unemployed who are seeking work.
State the meaning of the non-labour force.
The non-labour force includes all those not seeking work e.g. stay at home parents, pensioners, school children.
Define the term full employment.
Full employment describes the ideal situation when everyone willing and able to work has a job.
State two factors that cause changes in employment patterns.
Factors that cause changes in employment patterns include:
Changes in the structure of the economy
Changes to the proportion of women employed
Changes to public vs private sector employment
True or False?
More manufacturing jobs attract workers working in the primary sector.
True.
As economies develop, more manufacturing jobs in the secondary sector attract workers who had previously worked in the primary sector.
How have social attitudes affected women's employment?
Changing social attitudes have increased the number of women entering the workforce.
Define the term informal work.
Informal work refers to workers doing jobs that are not included in employment statistics.
What is a benefit of part-time work?
Part-time work provides more flexibility for workers. There has been an increase in the number of part-time workers in recent years.
What impact did Covid-19 have on work patterns?
Covid-19 caused many people to continue working from home rather than return to a commuting lifestyle.
True or False?
The labour force includes pensioners.
False.
The labour force excludes pensioners, who are part of the non-labour force.
What are the two methods used to measure unemployment?
Unemployment is often measured using the ILO Labour Force Survey and the Claimant Count.
What is the ILO Labour Force Survey?
The ILO Labour Force Survey is an extensive survey sent to a random sample of households every quarter, where respondents self-determine if they are unemployed based on ILO criteria.
What is the Claimant Count?
The Claimant Count counts the number of people claiming unemployment benefits.
How does the Claimant Count differ from the ILO Survey?
The Claimant Count has more stringent requirements to be considered unemployed and excludes certain groups, like those with savings or married women seeking jobs.
What three metrics are used to analyse the labour market?
Three metrics used to analyse the labour market are:
The unemployment rate
The employment rate
The labour force participation rate
State the formula used to calculate the unemployment rate.
Formula.
Unemployment rate =
(those actively seeking work ÷ total labour force) x 100
State the formula used to calculate the labour force participation rate.
Formula.
The labour force participation rate =
(labour force ÷ total population) x 100
What is hidden unemployment?
Hidden unemployment occurs when workers look for a job but eventually give up and become economically inactive, improving the unemployment rate measure.
Define the term economically inactive.
Economically inactive refers to those not seeking work, like stay-at-home parents, pensioners, and students.
True or False?
The Claimant Count includes all unemployed people.
False.
The Claimant Count excludes certain unemployed groups, like those with savings or married women seeking jobs.
What are the four types of unemployment?
The four types of unemployment are structural, cyclical, frictional and seasonal.
Define structural unemployment.
Structural unemployment occurs when there is a mismatch between jobs and skills in the economy. This usually happens as the structure of the economy changes.
What causes structural unemployment?
Structural unemployment is caused by a decline in certain industries, resulting in a mismatch between available jobs and worker skills.
Define cyclical unemployment.
Cyclical unemployment is caused by a fall in total (aggregate) demand in an economy. This happens during a recession or economic slowdown.
Define frictional unemployment.
Frictional unemployment occurs when workers are between jobs, usually for a short period of time.
What determines the demand for labour?
The demand for labour is derived from the demand for goods and services.
True or False?
Frictional unemployment is long-term.
False.
Frictional unemployment is usually short-term, as workers are between jobs.
Define the term underemployment.
Underemployment refers to situations where workers are overqualified for their job or work fewer hours than desired.
True or False?
Cyclical unemployment is caused by a change in the structure of the economy.
False.
Cyclical unemployment is caused by a fall in total demand.
True or False?
Frictional unemployment is voluntary.
False.
Frictional unemployment often occurs when workers voluntarily leave their jobs. However, people who have been fired and are looking for a new job would also be considered to be frictionally unemployed.
True or False?
Unemployment only impacts the person who is unemployed.
False.
Unemployment affects individuals, the economy, the government, and firms.
How does unemployment affect individuals?
Individuals suffer significant emotional, relational, and financial consequences from unemployment.
How does unemployment affect the economy?
The economy contracts as there is more inefficient use of available resources when workers are unemployed.
How does unemployment affect the government?
Governments receive less tax revenue and have higher expenditures on welfare payments.
Define long-term unemployment.
Long-term unemployment refers to extended periods of unemployment, usually longer than six months.
True or False?
Short-term unemployment has little emotional impact on the unemployed.
False.
The uncertainty generated by any type of unemployment may have a negative emotional impact on individuals.
What financial impact can unemployment have?
Unemployment results in a loss of income, which will have a significant impact on individuals with low savings.
How can unemployment contract the economy?
Households that have lost their income spend less on consumption. As unemployment rises, consumption falls and total demand decreases.
How does falling unemployment impact tax revenue?
If the unemployment rate reduces, tax revenue will rise as more people earn income.
What are demand-side policies?
Demand-side policies aim to increase total (aggregate) demand in an economy to reduce cyclical unemployment.
What impact will expansionary fiscal policy have on unemployment?
Expansionary fiscal policy increases government spending or reduces taxes to boost total demand and employment.
What is an example of expansionary fiscal policy.
Decreasing the corporation tax is an example of expansionary fiscal policy that increases firms' profits and hiring.
True or False?
Expansionary monetary policy refers to increasing interest rates or increasing the money supply to boost spending and employment.
False.
Expansionary monetary policy refers to lowering interest rates or increasing the money supply to boost spending and employment.
Define supply-side policies.
Supply-side policies aim to improve the quantity or quality of the factors of production in order to raise potential output and reduce unemployment.
Give an example of a supply-side policy.
Reducing trade union power allows firms to lower wages, reducing costs and possibly increasing employment.
Which types of unemployment do supply-side policies best address?
Supply-side policies are most effective at reducing structural and frictional unemployment.
Define the term protectionism.
Protectionism involves government policies like tariffs and subsidies to restrict trade and protect domestic employment.
What is a drawback of protectionist policies?
While protectionism may protect some industries, it can increase unemployment in related industries that use those protected goods as inputs into their production process.
True or False?
Expansionary policies create full employment.
False.
Expansionary demand-side and supply-side policies can reduce unemployment but do not necessarily create full employment.