Unemployment

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What are the personal costs of unemployment?

Stress, loss of income, permanent deskilling, reduced self-esteem.

Which types of unemployment are included in the natural rate?

Frictional, seasonal, and structural unemployment.

What does the unemployment rate measure?

The percentage of the labor force that is actively seeking work but unable to find a job.

What is frictional unemployment?

Short-term unemployment as workers transition between jobs.

How might regional unemployment occur?

Due to the decline of certain industries in specific areas.

What is the natural rate of unemployment?

The sum of structural, frictional, and seasonal unemployment when the economy is at full employment.

What are the social costs of unemployment?

Increased crime, family breakdown, increased poverty, social exclusion.

What is seasonal unemployment?

Unemployment due to seasonal changes in demand for labour.

Why is measuring unemployment difficult?

Discouraged workers and underemployment are not fully captured in official statistics.

What is structural unemployment?

Unemployment due to a mismatch between workers’ skills and job requirements - sectoral, regional and technological.

What diagram shows cyclical unemployment?

A labour market diagram showing demand shifting inwards or an AD/AS diagram showing a deflationary gap.

What is cyclical unemployment?

Unemployment caused by a fall in aggregate demand in the economy.

What is meant by the labor force?

People who are employed plus those actively seeking work.

How is the unemployment rate calculated?

Unemployed ÷ Labor force × 100

What is a policy to reduce structural unemployment?

Investment in education and retraining programs.

What is hidden unemployment?

Unemployment not reflected in official figures, e.g., discouraged workers.

What are the economic costs of unemployment?

Lost output, lower productivity, increased government spending on welfare, lower tax revenue.

What diagram shows unemployment from a fall in labor demand?

A labour market diagram with a leftward shift in the demand for labor.

Why might the unemployment rate understate actual unemployment?

It ignores discouraged workers and underemployed part-time workers.

How can minimum wage legislation cause unemployment?

It can lead to a surplus of labour if set above the equilibrium wage.

The Curious Economist

Economic news for students

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