Employment and Unemployment MCQ 1

Employment and Unemployment

• Full Employment: A situation where everyone who wants a job can find one at existing wage levels, usually indicated by an unemployment rate of 4%.
• Zero Unemployment: Unachievable in reality due to structural and frictional unemployment.

Key Concepts

• Employment: Refers to individuals currently engaged in work in return for payment.
• Unemployment: Refers to individuals who are not working but are available for work and actively seeking work.
• Workforce: All those who are employed.
• Labour Force: All those who are available for work and are actively seeking work or engaged in work currently (includes both workforce and unemployed individuals).
• Unemployment Rate: The proportion of the labour force that is currently unemployed.

Additional Concepts

• Underemployment: Occurs when a worker's skills/time are not being utilized to their full potential, e.g., a highly qualified family member returning home to work on the family farm.

Causes of Unemployment

• Structural Unemployment: arises from a mismatch between the skills of the unemployed and available job openings, often due to technological advancements rendering certain jobs obsolete, such as checkout operators being replaced by self-service tills.

Types of Unemployment

• Frictional Unemployment: occurs when individuals are transitioning between jobs, entering the labor force for the first time, or seeking new employment opportunities after leaving a previous job.

Seasonal Unemployment

• Temporary unemployment experienced by individuals working in industries with seasonal fluctuations, such as tourism, resulting in job losses during off-peak seasons, e.g., tour guides or hotel receptionists during winter months.

Cyclical Unemployment

• Unemployment resulting from decreased demand for goods and services during economic downturns, such as the 2008 financial crisis in Ireland or the 2020 Covid-19 pandemic, leading to increased job losses.

Understand the concepts of employment, unemployment, and full employment in economics. Learn about the different types of unemployment and how they affect the economy.