Study Notes
Employment refers to the engagement of a person in the labour force in some occupation, while unemployment is when individuals are not in paid employment but are available for work. Full employment is a situation where there is no cyclical unemployment, though other types may exist.
- Employment — engagement of a person in the labour force in some occupation. Example: A teacher working in a school.
- Unemployment — persons not in paid employment but available for work. Example: A person actively seeking a job but not currently employed.
- Full Employment — no cyclical unemployment, though structural and frictional may remain. Example: An economy where everyone who wants a job can find one, except for those in transition or with skill mismatches.
- Labour Force — all those who work for gain, including the unemployed seeking work. Example: Employees, employers, and job seekers.
- Dependent Population — people not in the labour force relying on it for goods and services. Example: Retired individuals and students.
- Participation Rate — the number of people employed or seeking employment. Example: The percentage of the working-age population that is either employed or actively looking for work.
Exam Tips
Key Definitions to Remember
- Employment
- Unemployment
- Full Employment
- Labour Force
- Dependent Population
- Participation Rate
Common Confusions
- Confusing cyclical unemployment with structural unemployment
- Misunderstanding the difference between the labour force and the dependent population
Typical Exam Questions
- What is the definition of unemployment? Unemployment is when individuals are not in paid employment but are available for work.
- How is the unemployment rate measured? It is the number of unemployed people divided by the total number of people in the labour force.
- What are the consequences of high unemployment? High unemployment can lead to poverty, reduced living standards, and increased crime rates.
What Examiners Usually Test
- Understanding of different types of unemployment
- Ability to explain the consequences of unemployment
- Knowledge of policies to reduce unemployment