9708 · 9.3
Employment/unemployment flashcards
Revision flashcards for Cambridge 9708 Employment/unemployment (syllabus 9.3). Flip, recall, then mark a real past-paper question.
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Frictional unemployment?
Short-term unemployment while workers search for jobs or firms search for workers — normal labour market turnover.
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Structural unemployment?
Mismatch between skills/location of workers and jobs available — persists even at full capacity.
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Cyclical (demand-deficient) unemployment?
Caused by insufficient AD in recession — falls when economy recovers.
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What is NAIRU?
Non-Accelerating Inflation Rate of Unemployment — lowest unemployment rate consistent with stable inflation.
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Labour force survey vs claimant count?
LFS: ILO definition (actively seeking work); claimant count: those receiving unemployment benefit — LFS usually higher.
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Policy for cyclical vs structural?
Cyclical: expansionary fiscal/monetary policy. Structural: retraining, education, relocation grants, supply-side reform.
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What is Structural Unemployment?
A type of long-term unemployment caused by a mismatch between the skills workers possess and the skills demanded by employers, often due to technological change, the decline of an industry, or globalisation.
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Define the Labour Force Survey (LFS) measure of unemployment.
A quarterly survey of households that measures unemployment based on the ILO definition: an individual is unemployed if they are without a job, have actively sought work in the last 4 weeks, and are available to start in the next 2 weeks.
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What is the NAIRU?
The Non-Accelerating Inflation Rate of Unemployment. It is the lowest rate of unemployment that can be sustained without causing inflation to accelerate. It is equivalent to the natural rate of unemployment.
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What is Cyclical (Demand-Deficient) Unemployment?
Unemployment that arises from a downturn in the business cycle, caused by a lack of aggregate demand in the economy. It increases during recessions and falls during economic booms.
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What is Real Wage Unemployment?
A type of disequilibrium unemployment that occurs when wages are forced above the market-clearing equilibrium level, for example by a minimum wage or trade union power, leading to an excess supply of labour.