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Unemployment

Unemployment. 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 unemployment. Starter. Unemployment.

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Unemployment

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  1. Unemployment

  2. 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 unemployment

  3. Starter

  4. Unemployment • 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%

  5. 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.

  6. 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 Price ASL ALF W1 ADL Q1 Q2 Qty of Employment Re-create on your whiteboards and explain.

  7. Types of Unemployment Structural Unemployment Unemployment due to declining industries such as mining or ship building Frictional Unemployment People who are unemployed between jobs Seasonal Unemployment Unemployment from seasonal jobs, e.g. Fruit picking Cyclical Unemployment General unemployment which follows the business cycle Technological Unemployment Unemployment due to technological advancements.

  8. Cyclical Unemployment PRICE LEVEL • Arises during downturn/recession • Fall in AD actual GDP lies below potential GDP – negative output gap • Labour derived demand • Unemployment rises AD1 LRAS AD2 P1 Y1 Y2 REAL GDP

  9. Classical Unemployment Price • Wage rate increases • More workers supply themselves QS • Firms demand QD • Unemployment QS-QD ASL W2 W1 ADL Q1 QD QS Qty of Employment

  10. Armies of the Unemployed • What may be the social costs in the EU of high unemployment?

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