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IGCSEEconomicsCambridge (CIE)Revision Notes4. Government & the Macroeconomy4.7 Employment & UnemploymentMeasurement of Unemployment

Measurement of Unemployment (Cambridge (CIE) IGCSE Economics)

Revision Note

Steve Vorster

Written by: Steve Vorster

Reviewed by: Jenna Quinn

The Claimant Count and Labour Force Survey

  • Unemployment is often measured using two different approaches

    • The International Labour Organisation (ILO) Survey

    • The Claimant Count

The Differences Between the ILO Labour Force Survey and the Claimant Count

The ILO Labour Force Survey

The Claimant Count

  • An extensive survey is sent to a random sample of ≈ 60,000 households every quarter

  • Respondents self-determine if they are unemployed based on the ILO criteria

    • Ready to work within the next two weeks

    • Have actively looked for work in the past one month

  • The same survey is used globally so it's useful for making international comparisons

  • Counts the number of people claiming unemployment benefits

  • More stringent requirement to be considered unemployed than with the ILO survey

  • Requires claimants to meet certain criteria and excludes many e.g.

    • Those with savings

    • People who claim pensions

    • Married women who are looking for a job

Calculating the Unemployment Rate

Three Metrics Are Commonly Used When Analysing the Labour Market in an Economy

Unemployment rate

Employment rate

Labor force participation rate


equals fraction numerator no. space actively space seeking over denominator total space labour space force end fraction space straight x space 100


equals fraction numerator no. space in space employment over denominator population space of space working space age end fraction space straight x space 100


equals fraction numerator labour space force over denominator total space population end fraction space straight x space 100

  

  • The employment rate could be increasing even as the unemployment rate is increasing:

    • May be caused by increased immigration which causes working age population to increase

    • May be caused as people move from being economically inactive to employed

  • Unemployment rates do not capture the hidden unemployment that occurs in the long term

    • Workers look for a job but may eventually give up and become economically inactive

    • This actually improves the unemployment rate as fewer people are actively seeking work

Worked Example

The table provides information about a country's labour market

Population size

4000000

Labour force size

2400000

Number employed

1800000

Number of full-time students

200000

What is the unemployment rate of this country?

a) 15%

b) 25%

c) 50%

d) 75%

Step 1: Decide which information in the table is useful

  • The number of full time students would not be included in the labour force size, so it is not useful (it is a distraction)

  • The key infromation is the labour force size and the number employed
     

Step 2: Calculate the number of unemployed in the labour force

  • Labour force - employed = unemployed

  • 2,400,000 - 1,800,000 = 600,000 unemployed
     

Step 3: Calculate the unemployment rate

   Error converting from MathML to accessible text.

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    Author
    Reviewer
    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.

    Jenna Quinn

    Author: Jenna Quinn

    Expertise: Head of New Subjects

    Jenna studied at Cardiff University before training to become a science teacher at the University of Bath specialising in Biology (although she loves teaching all three sciences at GCSE level!). Teaching is her passion, and with 10 years experience teaching across a wide range of specifications – from GCSE and A Level Biology in the UK to IGCSE and IB Biology internationally – she knows what is required to pass those Biology exams.