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Unit 2 Macro: Unemployment Glossary
5th May 2012
A selection of key terms linked to the topic of unemployment
Data from Timetric.
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United Kingdom from Timetric
Capital-labour substitution
Replacing workers with machines in a bid to increase productivity and reduce unit costs. This can lead to structural unemployment
Claimant Count
The number of people claiming unemployment-related benefits. It is the number of people claiming Jobseeker’s Allowance
Classical unemployment
Classical unemployment is the result of real wages being above their market clearing level leading to an excess supply of labour
Cyclical unemployment
Involuntary unemployment due to a lack of demand for goods and services. This is also known as Keynesian unemployment
Discouraged workers
People often out of work for a long time who give up on job search leading to a rise in economic inactivity
Data from Timetric.
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Bank of England Target 2.0 from Timetric
Frictional unemployment
Transitional unemployment as people move between jobs or are in active job search
Full Employment
Jobs for all that want them but not zero unemployment because some people are always between jobs, there will usually be some frictional unemployment
Hidden unemployment
Unemployment which is known to exist but is not included in the official government figures, also known as under-employment, e.g. people taking part-time work because they cannot find a suitable full-time job. This tends to rise in a recession.
Labour shedding
When businesses reduce the size of their workforce
Labour shortages
When businesses find it difficult to recruit the workers they need
Labour supply
The number of people able, available and willing to work at prevailing wage rates
Long term unemployment
People out of work for at least one year, often suffering structural unemployment
Data from Timetric.
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United Kingdom from Timetric
Net inward migration
When the number of migrants coming into a country is greater than those leaving in a given time period
United Kingdom from Timetric
Structural unemployment
A mismatch between people’s skills and requirements of the new jobs due to occupational and geographical immobility of labour
Tight labour market
When demand for labour is high and there are shortages of labour. Businesses may have to offer higher wages to attract more workers
Under-employment
When people want to work full time but find that they can only get part-time work – the result is a loss of hours that the economy can use
United Kingdom from Timetric
Unemployment trap
When the prospect of the loss of unemployment benefits dissuades those without work from taking a new job – creates a disincentives problem
Data from Timetric.
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United Kingdom from Timetric
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.