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  2.  
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  5. Macro Economics
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  7. Unit 3 Economic Performance

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Summary employment and unemployment
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Provides the content required for A-Level Economics (AQA). Follows the specification and was compiled using class notes, an AQA textbook, revision guide and content from youtube teachers. Written by a student predicted an A*. Also contains content from PMT notes.

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  • August 8, 2023
  • 13
  • 2022/2023
  • Summary

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Employment and unemployment

What does “employed” mean?
 Employed means doing or having done paid work.
 The ONS defines an employed person as someone who has worked for at least one hour in
the previous week.

What does “unemployed” mean?
 Unemployment is defined as “Not in employment but able, willing and actively seeking
work.”
 A more specific definition from the ILO (and used by the ONS) is
o those aged 16 and over “without a job, have been actively seeking work in the past
four weeks and are available to start work in the next two weeks OR
o out of work, [but] have found a job and are waiting to start it in the next two
weeks.”

Level of unemployment is the number of people who are looking for a job but cannot find one
The rate of unemployment is the number of people out of work as a percentage of the labour force

Economically inactive population
 The economically inactive include:
o Discouraged (given up looking for work)
o Looking after family/home
o Students
o Long-term sick or disabled
o Temporary sickness
o Retired (before the state retirement age




The
main UK




measures of unemployment are the claimant count and the Labour Force Survey
Criticisms of the measures of employment in the UK
 There are criticisms of the labour market data published by the government:
 Data collection: The LFS is costly, using face-to-face interviews. The sample size of 40,000
families represents a population more than 1,000 times larger; there is error range of ±3%.
 Interpretation and bias: Government wants to present an upbeat, positive image: low
unemployment and high employment

, o Underemployment: “employment” includes those who work part-time and on zero
hours contracts, and those who want to work more but are unable to do so.
o Economic inactivity: includes many who could work (so might be unemployed).
o Overview hides differences: The “headline” unemployment rate does not include
variations between regions, gender, age etc. (although the ONS does publish these
data)
Claimant Count Labour Force Survey


What? The number of people claiming Uses a sample of the population.
unemployment related benefits from the It asks people who aren’t
government working if they’re actively
This includes people who claim Jobseekers seeking work
Allowance (JSA), Universal Credit and smaller The number of people who
groups of additional claimants answer ‘yes’ (whether they’re
claiming benefits or not) are
added up to produce the ILO
unemployment count
Advantages 1. The data is easy to obtain- you just count 1. Its thought to be more
the number of people claiming the accurate than the claimant
benefits count
2. There’s no cost in collecting the data- is it 2. Its an internationally agreed
recorded when people apply for the measure for unemployment,
benefit so its easier to make
comparisons with other
countries
Disadvantages 1. It can be manipulated by the government 1. Its expensive to collect and
to seem smaller- e.g. a change in the rules put the data together
(e.g. changing the school leaving age to 2. The sample may be
19) could reduce the number of people unrepresentative of the
who could claim benefits, which would population as a whole-
make it seem like unemployment was making the data inaccurate
falling
2. It excludes people who are looking for
work but are not eligible for benefits
Key note: the figure from the Labour Force Survey tends to be higher than the claimant count
because certain groups are excluded from the claimant count. This is because they cannot claim
benefits for reasons such as having a high earning husband or wife or having too much money in
their savings

Types and causes of unemployment

Supply side- the natural rate of unemployment, these are usually microeconomic imbalances in
labour markets. Its based on classical economics so unemployment is considered to be a short run
issue
Classical economists consider frictional and structural unemployment to be voluntary and they are
also known as equilibrium unemployment

Demand side- caused by a lack of aggregate demand in the economy- also known as cyclical
unemployment or Keynesian unemployment
Type of Supply or Explanation Causes

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