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90-handout - 26/10/2010 Employment and Unemployment A2...

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26/10/2010 1 Employment and Unemployment A2 Economics, Autumn 2010 Measuring Unemployment • A Working Definition of Unemployment – People able, available and willing to find work and actively seeking work – but not employed • The Claimant Count Measure – The number of people claiming the Jobseekers’ Allowance – a monthly headcount of the unemployed • The Labour Force Survey – Must have actively sought work in the previous four weeks and be available to start work immediately – A large sample – but subject to sampling error – This is the government’s preferred measure – The basis for cross-country comparisons
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26/10/2010 2 Unemployment in the UK Unemployed people aged 16-59 (women) / 64 (men), seasonally adjusted Unemployment in the UK Economy 10 11 12 13 10 11 12 13 3 4 5 6 7 8 9 per cent of the labour force 3 4 5 6 7 8 9 Claimant Count Labour Force Survey Source: Labour Force Statistics 90 92 94 96 98 00 02 04 06 08 10 0 1 2 0 1 2 Changes in the world of work
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26/10/2010 3 Flows in the Labour Market New hires Employed Labour force Unemployed Retiring Temporarily Recalls Job-losers Lay-offs Quits Discouraged workers Out of the labour force Taking a job leaving Re-entrants New entrants Types of Unemployment • Seasonal Unemployment – Regular seasonal changes in employment / labour demand – Unemployment data is usually given a seasonal adjustment to reflect this – Not a major concern for labour market economists – Affects certain industries more than others • Catering and leisure • Construction • Retailing • Tourism • Agriculture
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26/10/2010 4 Types of Unemployment • Frictional Unemployment – Irreducible minimum unemployment in a dynamic economy – Often involves short spells of unemployment – Includes new and returning entrants into the labour market – Imperfect information about available jobs can lengthen the period of job search – Some frictional unemployment is useful – a pool of available workers, can help to keep wage inflation down Graduate unemployment in the UK
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26/10/2010 5 Structural Unemployment • Labour market failure – Mismatch of skills as pattern of labour demand in the economy changes over time – Involuntary unemployment Factor immobility of labour is a major cause of structural unemployment – labour market failure – Often involves long-term unemployment – Prevalent in regions where industries go into long-term decline and have been major sources of employment – Labour market disincentives – poverty trap Cyclical unemployment • Cyclical (Keynesian) Unemployment – There is a clear cyclical relationship between demand output employment and demand, output, employment and unemployment – Caused by a fall in aggregate demand relative to potential GDP leading to a loss of real
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This note was uploaded on 02/08/2012 for the course FIN FIN4345 taught by Professor Koij during the Spring '10 term at FIU.

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90-handout - 26/10/2010 Employment and Unemployment A2...

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