Unemployment: Types & Effects
Government and the Macroeconomy · 4 question types
Exam Frequency Analysis
Past paper frequency (2018 to 2024)
This topic accounts for approximately 14% of your exam marks.
Types of unemployment (cyclical, structural, frictional, seasonal) and policy responses are tested in nearly every Paper 2 series.
The unemployment rate is the percentage of the that is unemployed.
The labour force = people in work + people actively seeking work. Children, retirees, full-time students and discouraged non-seekers are not part of it. So:
Unemployment is measured using the .
The Labour Force Survey (LFS)
The Labour Force Survey is a sample survey of households that asks people directly whether they are working, looking for work, or neither.
Strengths:
- Accurate measure of true unemployment because it asks people directly, picking up those who are looking for work but not registered with any benefit office.
- Internationally comparable because countries use the same survey definitions (ILO standards), so unemployment rates can be compared across borders.
- Captures details that administrative records cannot, such as demographic breakdowns and how long people have been out of work.
Weaknesses:
- Expensive to run, because it involves surveying a large sample of households regularly.
- Sample-based, so subject to a margin of error: the figure is an estimate, not a complete count.
- Available with a lag, because the survey results take time to collect and process.
Measuring unemployment
Identifying or explaining how unemployment is measured comes up (2 marks), so you need to know the method: the Labour Force Survey, a household survey that asks people directly whether they are working, looking for work, or neither. For an "explain" question, name and describe it (a sample survey of households used to estimate the number who are willing and able to work but cannot find a job).