Unemployment
| English | Chinese | Pinyin |
|---|---|---|
| unemployed | 失业者 | shī yè zhě |
| unemployment rate | 失业率 | shī yè lǜ |
| labour force | 劳动力 | láo dòng lì |
| claimant count | 申领救济人数 | shēn lǐng jiù jì rén shù |
| frictional | 摩擦性 | mó cā xìng |
| structural | 结构性 | jié gòu xìng |
| cyclical | 周期性 | zhōu qī xìng |
| aggregate demand | 总需求 | zǒng xū qiú |
The cost of idle hands
- Behind every percentage point of unemployment are real people — and lost output the economy never gets back.
- Measuring it, and knowing why it happens, is essential to fixing it.
There are 2.5 million unemployed in a labour force of 50 million. What is the unemployment rate (%)?
(2.5 / 50) × 100 = 5%.
The labour force is the number of people employed plus the number unemployed (and seeking work).
Labour force = employed + actively-seeking unemployed; the rate divides unemployed by this.
Measuring unemployment
- The unemployed 失业者 are those without a job but actively seeking one.
- Unemployment rate 失业率 = unemployed ÷ labour force 劳动力 × 100 (the labour force = employed + unemployed).
- Two measures: the claimant count 申领救济人数 (those on benefits) and the ILO/Labour Force Survey (a wider survey).
Worked example. 2.5m unemployed in a labour force of 50m. Rate = (2.5 ÷ 50) × 100 = 5%.
Three types of unemployment: frictional, structural and cyclical
Unemployment in the labour market
If the wage is stuck ABOVE the equilibrium, more workers want jobs than firms will hire — that gap is unemployment.
Unemployment caused by a fall in aggregate demand in a recession is called:
Cyclical unemployment rises and falls with the economic cycle / AD.
Match each type of unemployment to its cause.
Frictional = job search; structural = mismatch; cyclical = AD-driven.
Types of unemployment
- Frictional 摩擦性: between jobs (short-term, normal).
- Structural 结构性: skills/industry mismatch (e.g. coal mining declines).
- Cyclical 周期性 (demand-deficient): caused by a fall in AD during a recession.
A fall in aggregate ______ during a recession raises cyclical unemployment.
Lower AD → less output → fewer workers needed.
The AD link
- A fall in aggregate demand 总需求 lowers output, so firms need fewer workers → cyclical unemployment rises.
A fall in AD reduces equilibrium output (Y), so firms employ fewer workers — cyclical unemployment.
You've got it
- unemployment rate = unemployed ÷ labour force × 100
- types: frictional (between jobs), structural (skills mismatch), cyclical (AD-driven)
- a fall in AD raises cyclical unemployment