Unemployment Aims and Objectives Aim Understand types of

Unemployment

Aims and Objectives Aim: Ø Understand types of unemployment Objectives: Ø Define 2 measures of unemployment Ø Explain current trends in UK & EU Ø Analyse causes of unemployment Ø Evaluate social costs of unemployment

Starter

Unemployment Ø Number of people willing and able to work but unable to find work. Ø http: //www. bbc. co. uk/news/u k-17043305 Ø 2. 67 million Ø 8. 4%

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.

Equilibrium Unemployment Price ASL ALF W 1 ADL Q 2 Q 1 • ALF = aggregate labour force of a nation. • ASL = aggregate supply willing to work at W 1. • Unemployment = difference between ALF and ASL. • Q 2 -Q 1 Qty of Employment Re-create on your whiteboards and explain.

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

Cyclical Unemployment PRICE LEVEL AD 1 LRAS AD 2 • Arises during downturn/recession • Fall in AD actual GDP lies below potential GDP – negative output gap P 1 • Labour derived demand Y 2 Y 1 REAL GDP • Unemployment rises

Classical Unemployment Price • Wage rate increases • More workers supply themselves QS • Firms demand QD • Unemployment QS -QD ASL W 2 W 1 ADL QD Q 1 QS Qty of Employment

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