1. IGCSE®/O Level Economics
6.2 Employment and unemployment

2. Monitoring employment trends

3. Global trends in employment

4. Who are the working and dependent populations?
economically active population =
total supply of labour
The labour force participation rate measures the percentage of the population of working age that is economically active, i.e. either in work or looking for work and therefore able to produce goods and services

5. Labour force participation
Male participation rates have been falling: traditional male-dominated sectors such as mining and manufacturing industries have been shrinking, particularly in many developed countries
Female participation rates have been rising: the cost of living is rising in many countries; it is now more acceptable for women to work in many cultures; service industries are growing; there are more part-time jobs

6. Causes and types of unemployment
Frictional unemployment: Short-lived unemployment as people change jobs
Seasonal unemployment: temporary unemployment because some production and consumer demand is seasonal
Can cause a regional concentration of unemployment
Cyclical unemployment: prolonged, widespread unemployment during an economic recession due to falling and depressed aggregate demand
Structural unemployment: long-lived unemployment caused by industrial decline: many workers are made unemployed and have skills that are no longer wanted

7. Labour market imperfections
Labour market failures and imperfections may restrict employment opportunities:
Powerful trade unions may restrict the supply of labour to an occupation to boost wages
The payment of unemployment benefits may reduce the supply of labour and increase voluntary unemployment
High non-wage costs, including employers’ contributions to fund publicly provided unemployment and welfare benefits, may reduce the demand for labour
Minimum wage laws may reduce the demand for less skilled labour
Labour immobility can prevent unemployed people from moving to new jobs
Occupational immobility: inability to move to a new occupation because a worker lacks transferable skills
Geographic immobility: inability to move location to take a new job because of family ties and commitments (e.g. children at school), or regional differences in house prices make it unaffordable

8. The costs of unemployment
The personal costs include:
loss of income
possible loss of self-esteem, leading to depression, health and marriage problems
The costs to government include:
loss of income tax revenue
higher public spending on unemployment and welfare benefits
The costs to an economy
Unemployment is a waste of resources: output is lower than what it could otherwise be
Taxes may have to rise to pay for increased welfare payments