Unemployment: measurement and causes
| English | 中文 | Pinyin |
|---|---|---|
| labour force/ˈleɪbə fɔːs/ | 劳动力 | láo dòng lì |
| structural unemployment/ˈstrʌktʃərəl ʌnemˈplɔɪmənt/ | 结构性失业 | jié gòu xìng shī yè |
A decision you can investigate
- A graduate is searching for a first job; a resort closes after summer; a factory worker loses a job after automation.
- The same absence of paid work can have different causes.
Build the explanation
- Unemployment concerns people without work who are available and seeking work under the ILO approach. The labour force 劳动力 contains employed and unemployed people; economically inactive people are outside it.
- Cyclical unemployment follows weak demand; structural unemployment 结构性失业 follows a mismatch of skills or location; seasonal unemployment follows regular seasonal demand. Frictional unemployment occurs while moving between jobs. Voluntary unemployment describes choosing not to accept available jobs at prevailing conditions; inactivity and measured unemployment must still be distinguished.
Work through the evidence
- A fictional population has 900 employed, 100 unemployed and 200 economically inactive people. Labour force = 900+100 = 1000; unemployment rate = 100/1000 × 100 = 10%, not 100/1200.
- Lost jobs can reduce output and waste available labour. Household incomes and confidence fall, poverty may rise, tax receipts can fall and benefit spending rise. Firms may invest less because sales expectations weaken; prolonged unemployment can damage skills and social well-being.
What is the fictional unemployment rate?
The denominator is 1000 employed plus unemployed.
Test the limits
- Do not count every student or retiree as unemployed. The denominator is the labour force, not total population.
- Diagnose the cause before choosing policy: stronger spending may help cyclical job loss but may not give an automated worker new skills. Many real cases have more than one cause.
A resort regularly closes each winter. This is most directly
The repeated seasonal change drives the job loss.
An economically inactive retiree must be included among ILO unemployed people.
No work alone is insufficient; availability and job-search criteria matter.
Apply and explain your answer
- Why is retraining more directly relevant to the automated worker than to a normal short job-search gap?
- Automation can create a structural skills mismatch; a frictional gap may instead require matching with existing vacancies.
Which fiscal consequence can follow rising unemployment?
Fewer earnings reduce some tax receipts while more claimants may need benefits.
Use the terms precisely
- labour force: Employed people plus unemployed people meeting the measurement criteria.
- structural unemployment: Unemployment caused by a mismatch of skills or location with available jobs.
Match the terms to their meanings.
Each term describes a specific mechanism in this lesson.
A fictional population has 900 employed, 100 unemployed and 200 economically inactive people. Labour force = 900+100 = 1000; unemployment rate = 100/1000 × 100 = 10%, not 100/1200. Lost jobs can reduce output and waste available labour. Household incomes and confidence fall, poverty may rise, tax receipts can fall and benefit spending rise. Firms may invest less because sales expectations weaken; prolonged unemployment can damage skills and social well-being.
Do not count every student or retiree as unemployed. The denominator is the labour force, not total population. Diagnose the cause before choosing policy: stronger spending may help cyclical job loss but may not give an automated worker new skills. Many real cases have more than one cause.
Unemployment concerns people without work who are available and seeking work under the ILO approach. The labour force contains employed and unemployed people; economically inactive people are outside it.