Aims and Objectives Aim Understand types of unemployment Objectives Define 2 measures of unemployment Explain current trends in UK amp EU Analyse causes of unemployment Evaluate social costs of unemployment ID: 431562
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Slide1
UnemploymentSlide2
Aims and Objectives
Aim:
Understand types of unemployment
Objectives:
Define 2 measures of unemployment
Explain current trends in UK & EU
Analyse causes of unemployment
Evaluate social costs of unemploymentSlide3
StarterSlide4
Number of people willing and able to work but unable to find work.
http://
www.bbc.co.uk/news/uk-17043305
2.67 million
8.4%
UnemploymentSlide5
LFS & Claimant Count
LFS
Includes people who have looked for work in the past month and are able to start work in two weeks.
Claimant Count
Includes people able to claim JSA.Slide6
Equilibrium Unemployment
ALF = aggregate labour force of a nation.
ASL = aggregate supply willing to work at W1.
Unemployment = difference between ALF and ASL.
Q2-Q1
ASL
ALF
W1
ADL
Q1
Q2
EMPLOYMENT
RWR
Re-create on your whiteboards and explain.Slide7
Replacement Ratio
In the case of a low paid worker loosing their job the replacement ratio is one factor influencing time spent searching for a new job.
Replacement Ratio = disposable income out of work
disposable income in work
High level of benefits disincentives employment
Ratio of 1 means receive same on benefits as would if employed.
High ratio = unemployment trapSlide8
Replacement Ratio
Age Range
JSA Maximum Amount
Under 25
£53.45pw
Over
25
£67.50pw
Couple
£105.95pw
Beauty Technician Job – Barton Le Clay £6.08ph 16 hours per week
Calculate Replacement Ratio
£53.45/£97.28 = 0.55
The benefits received when unemployed 'replace'
55%
of the worker's disposable income when in
work.Slide9
Replacement Ratio
Age Range
JSA Maximum Amount
Under 25
£53.45pw
Over
25
£67.50pw
Couple
£105.95pw
Over 25
Care Assistant Dunstable £8.07ph
25 hours
pw
Calculate Replacement Ratio
£67.50/£201.75 = 0.33
The benefits received when unemployed 'replace'
33%
of the worker's disposable income when in
work.
For which job is there more incentive to remain on benefits and unemployed?Slide10
Types of Unemployment
Task
Can you remember the five types of unemployment in an economy?Slide11
Structural Unemployment
Unemployment due to declining industries such as mining or ship building
Frictional Unemployment
People who are unemployed between jobs
Cyclical Unemployment
General unemployment which follows the business cycle
Seasonal Unemployment
Unemployment from seasonal jobs, e.g. Fruit picking
Technological Unemployment
Unemployment due to technological advancements.Slide12
Cyclical Unemployment
Arises during downturn/recession
Fall in AD actual GDP lies below potential GDP – negative output gap
Labour derived demand
Unemployment rises
AD2
LRAS
P
1
AD1
Y
1
Y
2
PRICE LEVEL
REAL GDPSlide13
Classical Unemployment
Wage rate increases
More workers supply themselves QS
Firms demand QD
Unemployment QS-QD
ASL
ADL
Real Wage
Employment
Q1
QD
QS
W
1
W2Slide14
Armies of the Unemployed
What may be the social costs in the EU of high unemployment?