BSB115 Lecture Notes - Lecture 9: Gdp Deflator, Labour Force Survey, Frictional Unemployment
Lecture 9 – Unemployment and inflation
- The Australian Bureau of Statistics labour force survey
o Monthly sample of around 0.32% of the population aged 15 and over
o To be classified as employed, a person must have worked in paid employment only 1
hour or more in the week before the survey
o To be classified as unemployed, a person must not have worked at all in the week
before the survey, must have been actively looking for work in the past 4 weeks, and
must be ready to start work immediately
Measuring the unemployment rate
o
100 X
forceLabour
unemployed ofNumber
rateent Unemploym =
Measuring the labour force participation rate
o
100 X
population age Working
force Labour
rate ionparticipat force Labour =
Problems with measuring the unemployment rate
- Number of discouraged workers increases during a recession
o Official unemployment rate appears lower than it would otherwise be
- Under-employed workers
o People who work pat-time but would like to work more hours
- People who claim to be unemployed but are not
o Leads to unemployment rate being overstated
The costs of unemployment
- Costs to the economy
o Loss of GDP
o Loss of human capital
o Retraining costs
- Costs to the government
o Unemployment benefit payments are a net drain on the federal budget
o Opportunity cost of funds directed towards unemployment benefits
o Loss of tax revenue
- Costs to the individual
o Loss of income
o Loss of skills
o Retraining costs
o Loss of self esteem
o Social costs
Types of unemployment
- Cyclical (aka demand deficient- unemployment due to economic fluctuations
- Structural (arises from changes in technology and structure of economy
- Frictional (arises from normal labour turnover)
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Number of discouraged workers increases during a recession: official unemployment rate appears lower than it would otherwise be. Under-employed workers: people who work pat-time but would like to work more hours. People who claim to be unemployed but are not: leads to unemployment rate being overstated. Costs to the economy: loss of gdp, loss of human capital, retraining costs. Costs to the government: unemployment benefit payments are a net drain on the federal budget, opportunity cost of funds directed towards unemployment benefits, loss of tax revenue. Costs to the individual: loss of income, loss of skills, retraining costs, loss of self esteem, social costs. Cyclical (aka demand deficient- unemployment due to economic fluctuations. Structural (arises from changes in technology and structure of economy. Unemployment due to lack of demand during certain times of the year. Full employment occurs when all unemployment is frictional and structural: natural rate of unemployment, natural rate of unemployment or non-accelerating inflation rate of unemployment.
