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 data
Define working age population and labour force
Relate 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 population
0 Usually resident, non-institutionalised civilian population of NZ aged 15
years and over
0 The Labour Force
0 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
𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 100
×
= 𝑼𝒏𝒆𝒎𝒑𝒍𝒐𝒚𝒎𝒆𝒏𝒕 𝑹𝒂𝒕𝒆
𝑙𝑎𝑏𝑜𝑢𝑟 𝑓𝑜𝑟𝑐𝑒
1
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 months
0 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 quarter
0 Has 30 000 respondents each month
0 Only began in 1985 – Limited history data
0 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 night
In 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 job
I need a
bus driver
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
Price
Level
Economic
activity
AS
PL
PL1
AD1
Y1
Y
AD
Real Output
Downturn in eco activity,
where cyclical
unemployment will occur
Time
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
w
($/hr)
Demand for Labour
w = the wage rate. Wages are the price of
labour or dollars paid per hour
Q = the quantity of labour demanded by
producers
w1
A decrease in the wage rate will result in a
larger quantity of labour being demanded
ceteris paribus.
w2
DL
q1
q2
An increase in wages will result in a smaller
quantity of labour being demanded ceteris
paribus
Q (hours)