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

1. Aquinas College Economics Department
Unemployment
Measurement, Types and
Combating
ECON4

2. Aquinas College Economics Department
Measuring Unemployment
1. Claimant Count: counting those who are in
receipt of Job Seekers Allowance
2. Labour Force Survey: This is the measure that
is used internationally. Includes those who
have looked for work in the past month and
are able to start a new job within two weeks
Normally higher than the Claimant Count as not all
unemployed people claim JSA

3. Aquinas College Economics Department
Causes of Unemployment
Geographical Immobility
– Lack of national knowledge or inability to move to
where employment is
Unemployment Trap
– If getting a job would leave the person worse off
financially than staying on benefits
Deindustrialisation
– A fall in the proportion of national output accounted
for by the manufacturing sector
Voluntary
– When workers choose not to accept work

4. Aquinas College Economics Department
Types of Unemployment
Often known as transitional unemployment
It exists when workers are moving between jobs
Typically graduates may take time to settle into a job they will
accept
1. Frictional Unemployment
Casual is when employees are made redundant on a short term
basis such as in the tourism or construction industry
Seasonal unemployment is casual unemployment but that varies
during times of the year such as Christmas employees
2. Casual & Seasonal Unemployment

5. Aquinas College Economics Department
Types of Unemployment
Exists when long run decline affects an area quite often links
with deindustrialisation
Changes within the structure of an economy help towards this
3. Structural Unemployment
A form of structural unemployment that occurs when workers
are replaced by machines
4. Technological Unemployment

6. Aquinas College Economics Department
Types of Unemployment
Exists during a recession in the economy and can attributed to a
fall in AD.
5. Cyclical Unemployment
Voluntary – when people choose not to accept work at the
current pay rate
Involuntary – occurs when a worker is prepared to accept the
current wage rate but cannot find work
6. Voluntary/Involuntary Unemployment

7. Aquinas College Economics Department
EX
Types of Unemployment
Results in wages being kept above the market clearing level
leading to an excess of labour
7. Classical Unemployment
RealWageRate
Employment
AS of Labour
AD for Labour
W1
W
QSQ
AS1
QD
Letter
Q Wage
Equilibrium
W1 Fixed Wage
Level
QD Labour
Demanded
QS Labour
Supplied
EX Excess
Supply

8. Aquinas College Economics Department
Consequences of Unemployment
Economic Costs:-
– Wastes scarce resources and lost output
– Likely to reduce consumer spending
– Ceteris Paribus it will reduced AD
– Government revenues fall
Social Costs:-
– Evidential links with unemployment and poor
health and higher divorce rates

9. Aquinas College Economics Department
Benefits of Unemployment
 Firms can keep wages low and lower costs
 Inflationary pressure can be kept low
 Reduced consumption of raw materials
particularly non renewables

10. Aquinas College Economics Department
Combating Unemployment
Government tries to stimulate demand in an economy hoping to
create a multiplier effect
Regional policies may also be used to target specific areas of
unemployment
1. Demand Side Policies
Programmes to reduce occupational immobility can be used to
make switching jobs easier – Education and Training
Geographical Immobility can be combated by investing in job
databases
2. Supply Side Policies