Economics Notes: Unemployment
1. What is Unemployment?
When people who are willing and able to work cannot find a job.
Measured as a percentage of the labour force.
2. Types of Unemployment
Cyclical: Caused by a fall in aggregate demand
Structural: Due to changes in industry/technology
Frictional: Time between jobs
Seasonal: Certain times of year (e.g., tourism)
Classical (Real-wage): Wages above market equilibrium
3. Measuring Unemployment
Claimant Count: Number claiming unemployment benefits
Labour Force Survey (LFS): Survey-based method
4. Impacts of Unemployment
Lower income and living standards
Increased government spending (e.g., benefits)
Social issues (e.g., crime, health problems)
Lower tax revenues
5. Policies to Reduce Unemployment
Demand-side: Stimulate AD (e.g., lower interest rates, government
spending)
Supply-side: Education, training, labour market reforms
End of Notes