Unemployment
Measuring unemployment
- Unemployment = people able and willing to work, seeking a job, but without one.
- the claimant count counts only benefit claimants (cheap, but misses non-claimants).
- the labour force survey asks a large sample — an international standard, better for comparing countries.
Practice
Which measure of unemployment is better for comparing different countries?
The labour force survey follows an international standard, so it compares countries better than the claimant count.
Types and causes
- frictional — short-term, between jobs.
- structural — an industry declines; skills no longer match jobs.
- cyclical — low AD in a recession (usually the largest).
- seasonal — work only at certain times (farming, tourism).
Practice
Unemployment caused by low aggregate demand in a recession is:
Cyclical unemployment rises in recessions when AD is low; it is usually the largest type.
Practice
When an industry declines and workers' skills no longer match available jobs, this is:
Structural unemployment comes from a mismatch between workers' skills and the jobs available.
Consequences
- wasted output (economy inside its PPC), lower incomes, higher government cost (more benefits, less tax), and harm to families/health.
You've got it
Key idea
- measure with the claimant count vs the labour force survey (better for comparison)
- types: frictional, structural, cyclical (recession), seasonal
- unemployment wastes output and raises government costs