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Flashcards in Unemployment Deck (35)
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1

unemployment

condition of someone of working age who is willing and able to work, actively seeking employment, but unable to find a job

2

unemployment rate

percentage of the total labor force in a nation that is unemployed

3

unemployment rate equation

number of unemployed / labor force *100%

4

labor force

  • employed
  • self-employed
  • unemployed
  • people in government training schemes
  • military

5

Why do unemployment rates vary depending on country?

  • existence of social safety nets
  • education levels of workforce
  • evolving structures of economy

6

labor force participation rate

proportion of working age population that is either unemployed or employed

7

what is not included when measuring labor force?

working age population population

8

How is unemployment measured?

claimant system ILO survey

9

What is the advantage of ILO over claimant system?

ILO incorporates unregistered unemployed as well so tends to show higher levels of unemployment

10

underemployment

condition of a worker who is technically employed, but is either over-qualified or is working part-time when full-time work is desired

11

do unemployment figures take underemployment into account?

no

12

What are the individual consequences of unemployment?

  • decreased household income and purchasing power
  • increased levels of psychological and physical illness (stress and depression)

13

What are the social consequences of unemployment?

  • downward pressure on wages for the employed (high unemployment = increased labor supply so workers must take pay cuts)
  • increased poverty and crime transformation of traditional societies (large-scale migrations and social upheaval)

14

What are the economic consequences of unemployment?

  • lower level of AD (consumption decreases), precautionary saving rises
  • under-utilization of nation's resources
  • Brain-drain (workers leave nation to find jobs - production possibilities of nation decrease)
  • Turn towards protectionism and isolationist policies (cheap foreign products blamed for unemployment so increase tariffs and increased domestic subsidies - will lead to market being less competitive globally because misallocating resources)
  • Increased budget deficits (unemployed take benefits and pay no tax)
  • Wastes resources invested in training and educating workers
  • Growth potential of nation decreases

 

15

What are the two broad categories of unemployment?

equilibrium dis-equilibrium

16

What are the types of equilibrium unemployment?

  • frictional
  • seasonal
  • structural
  • technological
  • consumption
  • location
  • regional

17

equilibrium unemployment

unemployment that exists when the market is at equilibrium (like circular flow)

18

frictional unemployment

voluntary unemployment due to people moving between jobs and who are engaged in job search

19

seasonal unemployment

jobs that do not last year round (e.g. agricultural workers)

20

structural unemployment

people made jobless because of capital-labor substitution', long run decline in labor demand causes lay-offs

21

technological unemployment

human jobs replaced by machinery (labor intensive to capital intensive)

22

consumption unemployment

if consumption patterns change, have to change skills

23

location unemployment

producers move country to decrease costs (cheaper labor)

24

long term unemployed

number of people out of work for at least one year

25

working population

population of working age

26

participation rate

percentage of working population who are in labor force

27

vacancies

number of registered jobs available but as yet unfilled

28

employment rate

percentage of population of working age that is in a job

29

hysteresis effect

  • damage that unemployment does to skills and employability of people out of work
  • longer out of job, less attractive to employers
  • technical and social skills decline -> higher structural unemployment and natural rate of unemployment

30

hidden unemployment

  • long-term unemployed give up active search for work and leave labor market
  • no longer counted in unemployment statistics