A.S 2.4 Internal

Unemployment 4 Credits

Employment

By the end of this unit you will be able to:Identify statistical sources of employment and

unemployment dataDefine working age population and labour forceRelate employment and unemployment to

population, working age population and labour force

Employment 0 ‘Employed’ generally taken as being paid

employment

0 What about a person raising their own children?This person is considered unemployed through a childcare worker performing the same function would be considered employed

0 A big issue is that of Underemployment. This is where someone is employed at a level below their full skill or training level. Or those people working part- time that would like to work longer hours.

0 e.g. Doctors driving Taxis.This is usually a problem faced by immigrants to NZ.

Employment - Definitions

0 Working age population0 Usually resident, non-institutionalised civilian population of NZ aged 15 years

and over

0 The Labour Force0 Working age population that is willing and able to work

Full Employment- Employment of the total labour force

The Resident Population of NZ

Working Age Population

Labour Force

Employment Definitions

0 Full-Time Labour Force – persons working 30 hours or more per week and unemployed persons seeking full-time work

0 Part-Time Labour Force – persons working one to 29 hours per week and unemployed persons seeking part-time work

Unemployment Rate

Nautrual Rate of unemployment = An unavoidable proportion of labour force will

always be without a job

Source – Treasury NZ

Measuring Employment 0 Statistics NZ uses three different surveys to measure employment

1.Quarterly Employment Survey 0 Conducted every three months0 Surveys approx 18000 businesses from a range of industries and

regions in NZ. 0 Measures quarterly estimates of average hourly and weekly wages

before and after tax and the number of filled jobs.

2. The Household Labour Force Survey 0 Based on a sample of about 15000 private dwellings each quarter0 Has 30 000 respondents each month0 Only began in 1985 – Limited history data0 It does meet the internationally accepted standard for measuring

unemployment and it is the official measure

Measuring Employment 0 3. The Census of population and Dwellings

0 5 yearly survey off all individuals in NZ on census nightIn 1991 the definition for Unemployment changed to ‘actively seeking work’ instead of merely wanting work. These changes affect its usefulness in comparisons in unemployment over time.

Measuring the Unemployed

0 There are two surveys that Stats NZ uses to measure unemployment

1.Household Labour Force Survey 2.The Census of Population and Dwellings

The department of labour, through Work and Income NZ (WINZ) produces the registered job-seekers statistics. However the job seekers register is no longer used for reporting on unemployment because policy changes over the last ten years mean that numbers are not comparable over time.

Work Book Pages 151- 152

Types of Unemployment

0 By the end of this unit you will be able to Define structural, frictional seasonal and cyclical

Unemployment Recognise these are forms of involuntary

unemployment Explain the pattern of the business cycle and relate it

to cyclical unemployment Define and explain the natural rate of unemploymen

Involuntary Unemployment 0 Involuntarily unemployed = People who are available to work at the current

wage rate but are unable to find a job.

0 Voluntary Unemployment = People without a job who don’t want one

There are three concepts that can help explain involuntary unemployment

0 1. Structural Unemployment = Unemployment caused by an imbalance between the skills of workers and the requirements of employers. 0 This is generally caused by a fall in final demand for a good or service, or because

there is a permanent technological change. E.g. Capital replacing workers.

I need a bus driver I need a job

Types of Unemployment 0 2. Frictional Unemployment = Short-term unemployment

caused by people temporarily between jobs, entering the job market for the first time or changing jobs where there is a few weeks of unemployment before starting the new job.

0 Frictional Unemployment is seen as a sign of a healthy economy. Where workers are moving from position to position.

0 Seasonal Unemployment – unemployment caused by the regular seasonal nature of work. E.g. Ski workers in the snow season, fruit picking in the summer.

Types of Unemployment 0 3. Cyclical Unemployment = Unemployment caused by a

downturn in economic activity generally. 0 Cyclical unemployment may be the result of inwards shift in

Aggregate Demand

AS

AD

Real Output

Price Level

PL

Y

AD1

PL1

Y1

Economic activity

TimeDownturn in eco activity, where cyclical unemployment will occur

Work Books Page 153 - 154

Demand For Labour

0 By the end of this unit you will be able to:Recognise the labour market as an example of a factor

market Outline the determinants of the demand for labour

Demand for Labour 0 Labour is a factor of production. The labour market is called a

factor market.The Demand for Labour 0 The demand for labour is a derived demand. It comes from the

demand for the goods and services produced. 0 Derived means ‘to come from’0 The demand for a good or service is a final demand.

The demand for ice cream workers comes from the demand for ice creams

Demand for Labour 0 The producers are the buyers of labour – they demand labour to produce

goods and services. 0 The demand for labour shows the quantity of hours/workers/available jobs

at any given wage rate ceteris paribus

DL

Demand for Labour w($/hr)

Q (hours)

w1

q1

w2

q2

w = the wage rate. Wages are the price of labour or dollars paid per hour

Q = the quantity of labour demanded by producers

A decrease in the wage rate will result in a larger quantity of labour being demanded ceteris paribus.

An increase in wages will result in a smaller quantity of labour being demanded ceteris paribus