Types and causes of unemployment
- Created by: Eleanor Ansell
- Created on: 27-01-21 14:50
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- Types & causes of unemployment
- Voluntary
- When workers choose to remain u/e & refuse job offers at current market wage rate
- they receive generous u/e benefits making accepting a job less attractive
- high marginal tax rates which reduce effective take home pay
- want a job more suited to their skills/ qualifications
- some jobs are seen as demeaning or tedious
- preference for leisure over working
- When workers choose to remain u/e & refuse job offers at current market wage rate
- Seasonal
- u/e arising in different seasons of the year so workers are laid off on a short-term basis
- the weather
- end of the Christmas shopping period
- u/e arising in different seasons of the year so workers are laid off on a short-term basis
- Involuntary
- when workers are willing to work at the current market wage rate but there aren't any jobs available
- Frictional
- transitional u/e due to people moving between jobs which creates a time lag
- becomes structural if it persists
- long-term u/e occurring when some industries are declining even though other industries may be growing
- Production needs new skills that workers don't have
- associated with occupational & geographical immobility
- long-term u/e occurring when some industries are declining even though other industries may be growing
- Geographicalimmobility
- family ties, local friendships discouraging you from moving, ignorance about job vacancies, cost of moving, difficulties of obtaining housing
- Occupationalimmobility
- difficulties in training for jobs, effects of restrictive practices, discrimination
- Examples: school leavers, mothers coming off maternity leave, early-retired, searching for work in between careers
- becomes structural if it persists
- transitional u/e due to people moving between jobs which creates a time lag
- Cyclical
- aka Keynesian/ demand-deficient u/e and caused by a lack of AD for goods & services. Occurs in a recession or depression
- in a recession real GDP contracts increasing spare productive capacity so firms cut their workforce
- Keynesian economists: it's involuntary & normally when AD shifts left, PL will fall too but they argue that there are contracts in place preventing this.
- Free-market economists: it's temporary and self-correcting provided that markets are sufficiently competitive and price & wages are both flexible
- aka Keynesian/ demand-deficient u/e and caused by a lack of AD for goods & services. Occurs in a recession or depression
- Voluntary
- Structural
- long-term u/e occurring when some industries are declining even though other industries may be growing
- Production needs new skills that workers don't have
- associated with occupational & geographical immobility
- Types & causes of unemployment
- Voluntary
- When workers choose to remain u/e & refuse job offers at current market wage rate
- they receive generous u/e benefits making accepting a job less attractive
- high marginal tax rates which reduce effective take home pay
- want a job more suited to their skills/ qualifications
- some jobs are seen as demeaning or tedious
- preference for leisure over working
- When workers choose to remain u/e & refuse job offers at current market wage rate
- Seasonal
- u/e arising in different seasons of the year so workers are laid off on a short-term basis
- the weather
- end of the Christmas shopping period
- u/e arising in different seasons of the year so workers are laid off on a short-term basis
- Involuntary
- when workers are willing to work at the current market wage rate but there aren't any jobs available
- Frictional
- transitional u/e due to people moving between jobs which creates a time lag
- becomes structural if it persists
- Geographicalimmobility
- family ties, local friendships discouraging you from moving, ignorance about job vacancies, cost of moving, difficulties of obtaining housing
- Occupationalimmobility
- difficulties in training for jobs, effects of restrictive practices, discrimination
- Examples: school leavers, mothers coming off maternity leave, early-retired, searching for work in between careers
- becomes structural if it persists
- transitional u/e due to people moving between jobs which creates a time lag
- Cyclical
- aka Keynesian/ demand-deficient u/e and caused by a lack of AD for goods & services. Occurs in a recession or depression
- in a recession real GDP contracts increasing spare productive capacity so firms cut their workforce
- Keynesian economists: it's involuntary & normally when AD shifts left, PL will fall too but they argue that there are contracts in place preventing this.
- Free-market economists: it's temporary and self-correcting provided that markets are sufficiently competitive and price & wages are both flexible
- aka Keynesian/ demand-deficient u/e and caused by a lack of AD for goods & services. Occurs in a recession or depression
- Voluntary
- long-term u/e occurring when some industries are declining even though other industries may be growing
- automation reduces the demand for labour
- aka technological u/e
- Eleanor Ansell
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