Unemployment

1. Unemployment Part 1

2. Important Resource • http://econsecondyear.wordpress.com/ • I will be putting all notes, useful resources and links to you tube clips on this wordpress site. This will be an important resource for your exam !

3. Today we will look at unemployment • What is unemployment in economic terms • What are the different types of unemployment

4. What is unemployment? • The term unemployment in an economic sense refers to people who are willing and able (i.e. not sick) for work, but whom are not currently employed (e.g. people on jobseekers allowance). • In short: Not working but seeking work

5. The unemployment rate measures what fraction of the labour force cannot find jobs. The unemployment rate rises during recessions and falls during expansions.

6. Not  in  the Labour Force (i.e., not considered unemployed) This category include students, homemakers and retired people. * Therefore not taken account in unemployment figures. This is a common misconception.

7. Types of Unemployment http://www.youtube.com/watch?v=ZckAN1KYB5I

8. Frictional unemployment • Frictional unemployment is the time period between jobs when a worker is searching for, or transitioning from one job to another. It is sometimes called search unemployment and can be voluntary based on the circumstances of the unemployed Individual. * You may be considered frictionally unemployed when you leave college. For example : the time it takes from finishing college and getting a job could be a month or two.

9. Structural Unemployment • Structural Unemployment : A longer-lasting form of unemployment caused by fundamental shifts in an economy. Structural unemployment occurs for a number of reasons – workers may lack the required job skills, Or they may simply be unwilling to work because existing wage levels are too low. So while jobs may be available, there is a serious mismatch between what companies need and what workers can offer. Structural unemployment is often influenced by extraneous factors such as technology, competition and government policy.

10. E.g. Many builders in Ireland are now out of work due to changes in demand for the economy. Many jobs that are available require I.T. skills which many builders may not have. So there is a mismatch in what the employers want and the skills that a potential labour force have. • Structural Unemployment is a longer term issue than Frictional Unemployment.

11. Seasonal Unemployment • Periodic unemployment due to seasonal trends. • Example: People who work in Tourism are often affected. Many hotel workers are laid off for the off season times. • Industries such as construction that are affected by the weather.

12. Cyclical Unemployment • Unemployment due to contractions in the economy • When the economy does well there are lots of jobs – this usually results in low rates of unemployment • When the economy does poorly – less demand for employees and the unemployment rates increase

13. Example : The post- boom recession in Ireland Cyclical employment is problematic because no two cycles/recessions are the same. So it is difficult to tell when employment levels will increase.

14. Summary • Unemployment in an economic sense refers to – people who are actively seeking and able for employment, but who have no job at present. • People not considered unemployed: Students, pensioners, homemakers. • Four common types of unemployment: Frictional, structural, seasonal, and cyclical.