Measurement of Unemployment (Cambridge (CIE) O Level Economics)

Revision Note

Reviewed by: Jenna Quinn

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

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

Unemployment rate	Employment rate	Labor force participation rate
$= \frac{no . actively seeking}{total labour force} x 100$	$= \frac{no . in employment}{population of working age} x 100$	$= \frac{labour force}{total population} x 100$

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

The table provides information about a country's labour market

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

Step 3: Calculate the unemployment rate

$= \frac{no . actively seeking}{total labour force} x 100 = \frac{600, 000}{2, 400, 000} x 100 = 25 %$

Last updated: 20 June 2024

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