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Employment and unemployment
Key terms:
- Unemployment – people able and willing to find work and are actively seeking a job but do not currently have a job.
- The Labour Force – employed + unemployed.
- Underemployed – where a person does not have enough paid work or is doing work that doesn’t fully utilise their skills.
- Inactive – those able to work but choose not to participate in the labour force.
- Labour Force Survey – those who have been unemployed for at least 4 weeks and can start work within 2 weeks (minimum of 1 hour per week).
- Claimant count – those who are registered to receive benefits.
- Structural – change in the structure of an industry leading to labour not having the new required skills (e.g. coal mining).
- Frictional – workers unemployed but only for a very short period of time whilst between jobs.
- Seasonal – anything related to the time of the year (e.g. tourism).
- Cyclical or demand-deficient – unemployment caused by a recession. It is where jobs go during the recession, but they will come back.
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Unemployment and migration
Effects of migration:
Effects of migration:
Net migration: Immigration (people entering the country) minus emigration (people leaving the country).
Effects of unemployment:
On consumers:
On firms:
On the government:
On workers:
Society as a whole:
Effects of unemployment:
On consumers:
- Lower incomes and living standards fall.
- Wider unseen cost – the unemployed lose morale which may lead to repercussions for family members.
On firms:
- Consumers spend less → firms lower prices → firms generate less profit.
- However, workers are more willing to stay in their jobs due to the fear of becoming unemployed. Therefore, workers will increase their productivity so output increases.
On the government:
- An increase in unemployment means that the government will have to pay more jobseekers’ benefits and they will receive less income tax.
On workers:
- The skills of workers may become outdated or obsolete – e.g. office workers who have been out of work for a while may not have the necessary skills to use the new technology within the office instantaneously.
Society as a whole:
- Unemployed resources create an opportunity cost as society has a lower output.
- Society has a lower standard of living than the optimum level.
- There is the potential for more crime and civil unrest as more consumers have a lower annual income.
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