Key terms on unemployment to revise

• Capital-labour substitution: Replacing workers with machines to increase productivity and reduce the unit cost of production
• Cyclical unemployment: Unemployment caused by a persistent lack of aggregate demand for goods and services.
• Discouraged workers: People out of work for a long time who may give up on job search and effectively leave the labour market.
• Frictional unemployment: Caused by workers seeking a better job; or who are in-between jobs, or new entrants to the labour market
• Full-employment: When there enough job vacancies for all the unemployed to take work.
• Geographical immobility: Difficulty in moving regions / areas to get a job
• Hysteresis: When a sustained period of low aggregate demand can lead to permanent reduction in the active labour supply
• Involuntary unemployment: A situation where a worker is willing to work at the going wage rate but cannot find a job
• Labour force: All people who are of working age, and able and willing to work. It includes both the employed, and the unemployed.
• Long-term jobless: People who have been unemployed for at least one year.
• NAIRU: The rate of unemployment consistent with stable inflation.
• Occupational immobility: Difficulties in learning new skills applicable to a new industry, and technological change
• Participation rate: % of the population of working age declaring themselves to be in the Labour Force.
• Phillips Curve: Shows a possible trade-off between inflation and unemployment
• Real wage unemployment: Theory that wages above the market clearing equilibrium may cause unemployment.
• Structural unemployment: Unemployment resulting from the decline in an industry which leaves people unemployed because they do not have the skills needed by industries that are growing
• Under-employment: When people want to work full time but find that they can only get part-time work
• Unemployment rate: Proportion of the economically active population who are unemployed.
• Unemployment trap: When the prospect of the loss of unemployment benefits dissuades those without work from taking a new job
• Zero hours contracts: Jobs that do not guarantee a minimum number of working hours each week.