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Unemployment - Coggle Diagram
Unemployment
Natural Unemployment
Frictional Unemployment
Voluntary/Involuntary unemployment transitions within an economy: Time taken to find a job after education/retrenchment/sacked etc.
Inevitable. Does not cause serious issues unless jobs are not found or issued over prolonged periods of time.
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Cyclical Unemploymeny
Also known as Demand Deficient Unemployment. Unemployment associated with the business cycle - alternating booms and slumps in economic activity.
Occurs during economic recessions, where firms are unable to sustain wage rates of workers, resulting in large amounts of retrenchment, involuntary unemployment.
Seasonal Unemployment
Unemployment due to weather fluctuations:
- Annual Weather Cycles.
- Traditions and Customs.
Real Wage Unemployment
When real wage is above market clearing: Often caused by Trade Unions, Increased wages will result in greater incentive to work > Surplus of workers > greater unemployment
Definition:
Number of people of the legal age who are willing and able to work at the going wage rate but are unable to find suitable employment
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Impacts
- Loss of output, unemployment = Waste of resources
- Fiscal cost to Gov.t = Less tax revenue
- Loss of Productive Capacity = erosion of skill > harder to find jobs.
- Severe Hardship and Misery
- Lower Standard of Living, Material due to lack of income and non-material, due to stress caused by the lack of income.
Unemployment Rate (U):
(Number Unemployed/Labour Force) * 100%
Labour Force = Number Employed + Number Unemployed
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