Unemployment

Unemployment

1. Unemployment occurs when people who are willing and able to work cannot find a job.

2. Homemakers: people who look after the household of their own families. For example, a parent who stays at home to look after the home and children.

3. economically inactive: people who are not in the labour force

4. economically active: People in the labour force

5. The labour force in an economy is defined as the total number of workers who are available for work.

   • A country's size of labour force could depend on:
     • the school leaving age
       • the number of people who remain in full-time education above the school leaving age
         • the retirement age
           • the proportion of women who join the labour force.
   • The labour force participation rate refers to the percentage of the total population of working age who are actually classified as being part of the labour force.

6. Level of unemployment and rate of unemployment

   • The level of unemployment refers to the total number of workers who are unemployed
   • The unemployment rate is the number of unemployed people as a percentage of the labour force.
   • The employment rate employed workers as a percentage of the population of working age.

7. The stock and flow of unemployment:

   • A stock is measured at a particular time period whereas a flow is measured over time. The level of unemployment and the unemployment rate show unemployment at a particular time period. They are a snapshot of unemployment at a certain point in time. They do not show the exact situation as people move into and out of unemployment.
     • The number of people unemployed may stay the same over a period of months. This does not necessarily mean that it is the same people, because some workers will have become unemployed over the time period while others will have found jobs or will have left the labour force. One reason why some people leave the labour force is because they become discouraged workers, giving up on the chances of finding a job.
       • Discourage worker: workers who would like a job but who have given up actively seeking work after a period of trying to find work.

8. Measures of Unemployment

   • The claimant count measure counts as unemployed those who register as unemployed in order to claim unemployment benefits.
   • The labour force survey measure involves conducting a survey asking people if they are employed, unemployed or economically inactive.
     • Sampling error: The people being surveyed having different characteristics or experiences to the rest of the population.