Unemployment | A-Level Economics Notes
These revision notes cover everything you need to know about Unemployment for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017.
What is unemployment?
The number of people who are willing and able to work, but cannot find a job.
How is unemployment measured?
- Labour Force Survey
- a quarterly survey asking 60,000 households about their employment status
- Claimant Count
- a count of those who are claiming unemployment benefits
What is seasonal unemployment?
When workers lose their jobs due to a lack of demand during a particular season e.g. tourism
What is frictional unemployment?
When workers are moving between jobs.
What is structural unemployment?
When there is lack of demand for the workers in one particular industry.
For example, UK steel industry (it is cheaper to import steel from China).
Workers need to re-train and work in another industry.
What is cyclical unemployment?
When there is a lack of aggregate demand in the economy, causing a lack of demand for workers across the economy.
What is the impact of unemployment?
- low disposable income and low consumer confidence
- fall in consumption
- left shift in aggregate demand
- fall in economic growth
- fall in tax revenue
- either the budget deficit worsens or the government may also cut spending.
- this could lead to a negative multiplier effect.
- this could cause a further increase in unemployment
- and this also causes deflationary pressure
Summary questions
- What is unemployment?
- How is unemployment measured?
- What is seasonal unemployment?
- What is frictional unemployment?
- What is cyclical unemployment?
- What is structural unemployment?
- Why is the impact of high unemployment?
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