IGCSE/O Level Economics Employment and Unemployment PDF

S16 IGCSE®/O Level Economics 6.2 Employment and unemployment © Brian Titley 2012: this may be reproduced for cl...

S16 IGCSE®/O Level Economics 6.2 Employment and unemployment © Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute  Monitoring employment trends © Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute  Global trends in employment © Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute  Who are the working and dependent populations? economically active population = total supply of labour The labour force participation rate measures the percentage of the population of working age that is economically active, i.e. either in work or looking for work and therefore able to produce goods and services © Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute  Labour force participation Male participation rates have been falling: traditional male-dominated sectors such as mining and manufacturing industries have been shrinking, particularly in many developed countries Female participation rates have been rising: the cost of living is rising in many countries; it is now more acceptable for women to work in many cultures; service industries are growing; there are more part-time jobs © Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute  Causes and types of unemployment Frictional unemployment: Short-lived Seasonal unemployment: temporary unemployment unemployment as people change jobs because some production and consumer demand is seasonal Aggregate demand $ billion Can cause a regional concentration of unemployment Cyclical unemployment: prolonged, widespread Structural unemployment: long-lived unemployment unemployment during an economic recession due to caused by industrial decline: many workers are made falling and depressed aggregate demand unemployed and have skills that are no longer wanted © Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute  Labour market imperfections Labour market failures and imperfections may restrict employment opportunities: X Powerful trade unions may restrict the supply of labour to an occupation to boost wages X The payment of unemployment benefits may reduce the supply of labour and increase voluntary unemployment X High non-wage costs, including employers’ contributions to fund publicly provided unemployment and welfare benefits, may reduce the demand for labour X Minimum wage laws may reduce the demand for less skilled labour X Labour immobility can prevent unemployed people from moving to new jobs Occupational immobility: inability to move to a new occupation because a worker lacks transferable skills Geographic immobility: inability to move location to take a new job because of family ties and commitments (e.g. children at school), or regional differences in house prices make it unaffordable © Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute  The costs of unemployment The personal costs include: loss of income possible loss of self-esteem, leading to depression, health and marriage problems The costs to government include: loss of income tax revenue higher public spending on unemployment and welfare benefits The costs to an economy Unemployment is a waste of resources: output is lower than what it could otherwise be Taxes may have to rise to pay for increased welfare payments © Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute