Employment and unemployment


Measures of unemployment

  • Claimant count - measures the number of people climing unemployment related benefits i.e. job seekers allowance
  • Labour force survey - quarterly survey of 60,000 households and counts unemployed as those who are actively seeking work and have not had a job during the week in question.
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Types of unemployment

  • Cyclical unemployment - also known as demand deficient/keynesian unemployment. Occurs when AD is well below full employment or when the economy is operating inside the PPF.
  • Frictional unemployment - when firms demand more of some labour skills while the demand for other types of labour declines. When a worker is unemployed when moving from one job to another.
  • Structural unemployment - unemployment resulting from the structural decline of industries which are unable to compete or adapt in the face of changing demand and new products, new production techniques and the emergence of more efficient competitors in other countries. Globalisation is a major contributor.
  • Seasonal unemployment - workers employed in holiday resorts and building workers in cold winters are often seasonally unemployed. 
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Policies to reduce unemployment

  • Depends on underlying cause
  • Expasnionary monetary and fiscal policy help reduce cyclical unemployment
  • Supply side policies are more appropriate for reducing frictional and structural unemployment
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