Unemployment Cambridge IGCSE Economics revision
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In plain words
Not everyone without a job is unemployed. A student, a retired person and a parent at home by choice are not counted. To be unemployed you must want a job, be able to do one, be looking for one, and not have one.
The reason someone is out of work matters, because different causes need different cures.
5 things to know
- Unemployment: people of working age who are willing and able to work, are actively seeking work, but do not have a job.
- The labour force is the employed plus the unemployed. Unemployment rate = number unemployed ÷ labour force × 100.
- It is measured by a labour force survey: a sample of households is asked whether each person is working, or is available for work and looking for it.
- Frictional: between jobs. Structural: an industry declines, or technology makes skills out of date. Cyclical: too little total demand, as in a recession. Seasonal: the work exists for only part of the year. Voluntary: choosing not to take a job at the wage on offer.
- Consequences: lower income and loss of skills for the individual, lower sales for firms, less tax revenue and more benefit spending for the government, and lost output for the economy.
Worked example
In a country, 38 million people are employed and 2 million are unemployed. Calculate the unemployment rate.
- Labour force = employed + unemployed = 38 + 2 = 40 million.
- Unemployment rate = unemployed ÷ labour force × 100 = 2 ÷ 40 × 100.
- The unemployment rate is 5%.
Tips and tricks
- Divide by the labour force, not by the population and not by the number employed.
- Match the cure to the cause: more total demand for cyclical unemployment, retraining for structural, better job information for frictional.
It lands in your notebook with its questions as flashcards.
Unemployment: 5 questions and answers
These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.
Which person is counted as unemployed?
They are willing and able to work, and actively seeking it.
3 million people are unemployed and 57 million are employed. What is the unemployment rate?
3 ÷ (3 + 57) × 100 = 5%.
Ski instructors have no work in the summer. This is
The work depends on the time of year.
Unemployment caused by a fall in total demand during a recession is
It moves with the economic cycle.
A worker leaves one job and spends three weeks looking for another. This is
It is the short gap between jobs.
Quiz
5 questions
Tap an answer and you’ll see straight away whether it’s right, and why.
Worksheet
4 questions, 10 marks. Write your answers on paper, then check them.
Unemployment
Cambridge IGCSE Economics 0455 · 10 marks · papermunch.org
Name ______________________________ Date ______________
Define unemployment.[2]
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People who are willing and able to work and are actively seeking work, but who do not have a job.
There are 1.5 million unemployed people in a labour force of 30 million. Calculate the unemployment rate.[2]
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5%. 1.5 ÷ 30 × 100.
A coal mine closes because power stations have switched to gas. Identify the type of unemployment and suggest a suitable policy.[3]
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Structural unemployment, because the industry has declined. Retraining schemes would give the miners skills for jobs in other industries.
Explain two costs of unemployment to a government.[3]
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It collects less income tax, because fewer people are earning. It has to spend more on unemployment benefits.
Answers: Unemployment
- 1. People who are willing and able to work and are actively seeking work, but who do not have a job.
- 2. 5%. 1.5 ÷ 30 × 100.
- 3. Structural unemployment, because the industry has declined. Retraining schemes would give the miners skills for jobs in other industries.
- 4. It collects less income tax, because fewer people are earning. It has to spend more on unemployment benefits.