Measuring unemployment: Macroeconomics

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  • Created by: Jade
  • Created on: 13-12-12 11:00

Measuring unemployment

  • Unemployment rate - the percentage of the labour force who are out of work.
  • The unemployed x 100% divided by the labour force 

In practice, it can be difficult to decide who is unemployed. 

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Labour Force Survey (LFS)

A measure of unemployment based on a survey using the ILO (International Labour Organisation) definiton of unemployment. 

Survey of 60,000 households that collects a range of information including:

  • Type of employment 
  • Earnings 
  • Educational qualifications 
  • Unemployment 
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Claimant Count

  • A measure of unemployment that includes those receiving unemployment related benefits 
  • Most are claiming jobseeker's allowance (JSA)
  • Claimants 'must declare that they are out of work, capable of, available for and actively seeking work in the week in which their claim is made'

Note: Labour force includes both the employed and unemployed 

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Difficulties in measuring unemployment

  • LFS measure is thought to capture more of those who are unemployed 
  • Some people can be actively seeking work but not entitled to claim unemployment benefits e.g. young people under 18, those whose partner is working/claiming benefits. 
  • These people would not appear in the claimant count but would appear in the LFS measure 
  • LFS measure is widely used by the OECD and statistical office of the European Union 
  • Widespread international use is very suitable for international comparisons.
  • LFS is more expensive to collect than the claimant count
  • Claimant count is relatively cheap, as the data is a by-product of administrative records of people claiming benefits. 
  • Claimant count is also relatively quick to compile and is available earlier than the LFS based unemployment. 
  • Some people claiming benefits may not be seeking work - may be claiming benefits on false pretences 
  • Claimant count is not suitable for international comparisons because the categories of people entitled to benefits varies over time and between countries. 
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