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AS Economics

Hugo Flower

on 5 October 2015

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Transcript of Unemployment

June 2010:
(b) (i) Explain the methods used to obtain measures of ILO unemployment and the
claimant count. (4)
(ii) Explain why ILO unemployment is still expected to rise above 3 million even
though ‘the worst of the economic downturn is over’ (Extract 1, line 1). (6)
Read the article on measuring unemployment
It should help you answer the past paper questions
Why is there a difference between the two figures?
1. Claimant Count Method.

This method calculates unemployment by measuring the number of people receiving benefits (Job Seekers allowance)

Issues with Claimant Count:
•The government has often changed the criteria (30 times since 1979) for those who are eligible for benefits.
The claimant count excludes:

•People pension age who typically claim pensions rather than JSA
•People under 18, (with a few exceptions)

•People in full time education, who may still be classed as unemployed.
•People not eligible for contribution based JSA. To claim the contributions based JSA they need to have paid at least two years of NI contributions.
•Also, their level of savings or their partner's income may be too high to be eligible.
•Any one on a government training schemes,
•Some people may not claim JSA even when they are eligible to.
•Married women looking to return to work
•Those looking for part time work and not full time work
Some people may claim JSA while still working fraudulently
This is compiled using the ILO criteria of comparing unemployment. The criteria involve:
2. The Labour Force Survey
•are without a job, want a job, have actively sought work in the last four weeks, and are able to start work within the next two weeks; or
• are out of work, have found a job and are waiting to start it
in the next two weeks
The Labour Force survey assess 60,000 people whether they are unemployed and whether they are looking for a job.

•It includes some people not eligible for JSA.

•Good for international comparisons.
However some problems:
•It could be subject to sampling errors and may not be truly representative
•Difficult to decide whether somebody is sick or actively seeking work
What causes unemployment?
Types of unemployment:
Geographical Immobility
Industrial Immobility
Occupational Immobility
What are the costs of unemployment?
The Government loses revenue
Waste of resources in the economy
Erosion of human capital
Opportunity cost
Lower incomes
External costs
Unemployment Rate
Interest rate
Economic Growth
Equilibrium price
Ten terms will appear

They will disappear after 30 seconds
Your task:

(1)List the terms +
(2) Define them

Purchasing Power Parity
Time's up!
Over to you...
Unemployment is a 'lagging indicator'
Full transcript