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Information on the Causes, Types of Unemployment plus the attempts at combating it

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  1. 1. Aquinas College Economics DepartmentUnemploymentMeasurement, Types andCombatingECON4
  2. 2. Aquinas College Economics DepartmentMeasuring Unemployment1. Claimant Count: counting those who are inreceipt of Job Seekers Allowance2. Labour Force Survey: This is the measure thatis used internationally. Includes those whohave looked for work in the past month andare able to start a new job within two weeksNormally higher than the Claimant Count as not allunemployed people claim JSA
  3. 3. Aquinas College Economics DepartmentCauses of UnemploymentGeographical Immobility– Lack of national knowledge or inability to move towhere employment isUnemployment Trap– If getting a job would leave the person worse offfinancially than staying on benefitsDeindustrialisation– A fall in the proportion of national output accountedfor by the manufacturing sectorVoluntary– When workers choose not to accept work
  4. 4. Aquinas College Economics DepartmentTypes of UnemploymentOften known as transitional unemploymentIt exists when workers are moving between jobsTypically graduates may take time to settle into a job they willaccept1. Frictional UnemploymentCasual is when employees are made redundant on a short termbasis such as in the tourism or construction industrySeasonal unemployment is casual unemployment but that variesduring times of the year such as Christmas employees2. Casual & Seasonal Unemployment
  5. 5. Aquinas College Economics DepartmentTypes of UnemploymentExists when long run decline affects an area quite often linkswith deindustrialisationChanges within the structure of an economy help towards this3. Structural UnemploymentA form of structural unemployment that occurs when workersare replaced by machines4. Technological Unemployment
  6. 6. Aquinas College Economics DepartmentTypes of UnemploymentExists during a recession in the economy and can attributed to afall in AD.5. Cyclical UnemploymentVoluntary – when people choose not to accept work at thecurrent pay rateInvoluntary – occurs when a worker is prepared to accept thecurrent wage rate but cannot find work6. Voluntary/Involuntary Unemployment
  7. 7. Aquinas College Economics DepartmentEXTypes of UnemploymentResults in wages being kept above the market clearing levelleading to an excess of labour7. Classical UnemploymentRealWageRateEmploymentAS of LabourAD for LabourW1WQSQAS1QDLetterQ WageEquilibriumW1 Fixed WageLevelQD LabourDemandedQS LabourSuppliedEX ExcessSupply
  8. 8. Aquinas College Economics DepartmentConsequences of UnemploymentEconomic Costs:-– Wastes scarce resources and lost output– Likely to reduce consumer spending– Ceteris Paribus it will reduced AD– Government revenues fallSocial Costs:-– Evidential links with unemployment and poorhealth and higher divorce rates
  9. 9. Aquinas College Economics DepartmentBenefits of Unemployment Firms can keep wages low and lower costs Inflationary pressure can be kept low Reduced consumption of raw materialsparticularly non renewables
  10. 10. Aquinas College Economics DepartmentCombating UnemploymentGovernment tries to stimulate demand in an economy hoping tocreate a multiplier effectRegional policies may also be used to target specific areas ofunemployment1. Demand Side PoliciesProgrammes to reduce occupational immobility can be used tomake switching jobs easier – Education and TrainingGeographical Immobility can be combated by investing in jobdatabases2. Supply Side Policies