Unemployment and Inflation. Unemployment and Inflation Nature of Unemployment

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  • Unemploymentand Inflation

    fig

  • Unemployment and InflationNature of Unemployment

  • NATURE OF UNEMPLOYMENTThe meaning of unemploymentdefining the unemployment rateclaimant unemployment

  • UK claimant unemployment flows (millions)

    1980

    1982

    1984

    1986

    1990

    1992

    1994

    1996

    1998

    2000

    2001

    Inflow

    Outflow

    Total

    unemployment

  • UK claimant unemployment flows (millions)

    1980

    1982

    1984

    1986

    1990

    1992

    1994

    1996

    1998

    2000

    2001

    Inflow

    3.85

    4.53

    4.50

    4.49

    3.53

    4.57

    3.94

    3.46

    3.08

    2.89

    2.79

    Outflow

    Total

    unemployment

  • UK claimant unemployment flows (millions)

    1980

    1982

    1984

    1986

    1990

    1992

    1994

    1996

    1998

    2000

    2001

    Inflow

    3.85

    4.53

    4.50

    4.49

    3.53

    4.57

    3.94

    3.46

    3.08

    2.89

    2.79

    Outflow

    3.21

    4.24

    4.40

    4.88

    2.82

    4.15

    4.34

    3.78

    3.17

    3.02

    2.85

    Total

    unemployment

  • UK claimant unemployment flows (millions)

    1980

    1982

    1984

    1986

    1990

    1992

    1994

    1996

    1998

    2000

    2001

    Inflow

    3.85

    4.53

    4.50

    4.49

    3.53

    4.57

    3.94

    3.46

    3.08

    2.89

    2.79

    Outflow

    3.21

    4.24

    4.40

    4.88

    2.82

    4.15

    4.34

    3.78

    3.17

    3.02

    2.85

    Total

    unemployment

    1.66

    2.92

    3.16

    3.29

    1.66

    2.78

    2.64

    2.12

    1.35

    1.10

    0.98

  • NATURE OF UNEMPLOYMENTThe meaning of unemploymentdefining the unemployment rateclaimant unemploymentdo claimant statistics give a true picture of unemployment?

  • NATURE OF UNEMPLOYMENTThe meaning of unemploymentdefining the unemployment rateclaimant unemploymentdo claimant statistics give a true picture of unemployment?standardised unemployment (ILO/OECD)

  • NATURE OF UNEMPLOYMENTThe duration of unemploymentinflows to and outflows from the stock of unemployment

  • Flows into and out of unemploymentSchool/college leaversPeople returning to the labour force (e.g. after raising children)People made redundantPeople sackedPeople temporarily laid offPeople resigningFrom jobsFrom outside the labour force

    fig

  • Flows into and out of unemploymentPeople made redundantPeople sackedPeople temporarily laid offPeople resigningUNEMPLOYMENTOUTFLOWS(per period of time)To jobsTo outside thelabour forcePeople taking new jobsPeople returning to old jobs who had been temporarily laid offPeople who have become disheartened and give up looking for a jobPeople who have reached retirement agePeople who temporarily withdraw from labour force (e.g. to raise a family)People who emigratePeople who dieINFLOWS(per period of time)From jobsFrom outside the labour forceSchool/college leaversPeople returning to the labour force (e.g. after raising children)

    fig

  • NATURE OF UNEMPLOYMENTThe duration of unemploymentinflows to and outflows from the stock of unemploymenteffects on the duration of unemployment

  • NATURE OF UNEMPLOYMENTThe duration of unemploymentinflows to and outflows from the stock of unemploymenteffects on the duration of unemploymentthe phase of the business cycle

  • Unemployment rates in selected industrial countriesUK

    fig

  • Unemployment rates in selected industrial countriesUK

    fig

  • Unemployment rates in selected industrial countriesUKFrance

    fig

  • Unemployment rates in selected industrial countriesUKFrance

    fig

  • Unemployment rates in selected industrial countriesUKFranceGermany

    fig

  • Unemployment rates in selected industrial countriesUKFranceGermany

    fig

  • Unemployment rates in selected industrial countriesUKFranceUSAGermany

    fig

  • Unemployment rates in selected industrial countriesUKFranceUSAGermany

    fig

  • Unemployment rates in selected industrial countriesUKFranceUSAGermanyJapan

    fig

  • Unemployment rates in selected industrial countriesUKFranceUSAGermanyJapan

    fig

  • Unemployment rates in selected industrial countriesUKFranceUSAGermanyJapanOECD

    fig

  • Unemployment rates in selected industrial countriesUKFranceUSAGermanyJapanOECD

    fig

  • NATURE OF UNEMPLOYMENTThe composition of unemploymentby geographical regionby sexby ageby ethnic groupsThe costs of unemploymentto the unemployed themselvesto family and friendsto society at large

  • Unemployment and InflationCauses of Unemployment

  • CAUSES OF UNEMPLOYMENTUnemployment and the labour marketaggregate demand and supply of labour

  • Disequilibrium unemploymentOAverage (real) wage rateNo. of workers

    fig

  • CAUSES OF UNEMPLOYMENTUnemployment and the labour marketaggregate demand and supply of labourequilibrium in the model

  • Disequilibrium unemploymentOAverage (real) wage rateNo. of workersASLADLWe

    fig

  • CAUSES OF UNEMPLOYMENTUnemployment and the labour marketaggregate demand and supply of labourequilibrium in the modeldisequilibrium unemployment

  • Disequilibrium unemploymentOAverage (real) wage rateNo. of workersASLADLWeW2

    fig

  • CAUSES OF UNEMPLOYMENTUnemployment and the labour marketaggregate demand and supply of labourequilibrium in the modeldisequilibrium unemploymentequilibrium unemployment

  • Equilibrium unemploymentOAverage (real) wage rateNo. of workersADLWeASLeQe

    fig

  • Equilibrium unemploymentQeOAverage (real) wage rateNo. of workersASLADLWeNe

    fig

  • Equilibrium and disequilibrium unemploymentOAverage (real) wage rateNo. of workersADLWeeQeASL

    fig

  • Equilibrium and disequilibrium unemploymentOAverage (real) wage rateNo. of workersASLADLWeW2bae

    fig

  • Equilibrium and disequilibrium unemploymentOAverage (real) wage rateNo. of workersASLADLWeW2baeNcDisequilibriumunemployment

    fig

  • CAUSES OF UNEMPLOYMENTDisequilibrium unemploymentreal-wage (classical) unemployment

  • Real-wage unemploymentOAverage (real) wage rateNo. of workersASLADLWeW1QeADL 2

    fig

  • CAUSES OF UNEMPLOYMENTDisequilibrium unemploymentreal-wage (classical) unemploymentdemand-deficient (cyclical) unemployment

  • Demand-deficient unemploymentADL 2OAverage (real) wage rateNo. of workersADL 1W1Q1ASL

    fig

  • CAUSES OF UNEMPLOYMENTDisequilibrium unemploymentreal-wage (classical) unemploymentdemand-deficient (cyclical) unemploymentunemployment arising from a growth in the labour supply

  • CAUSES OF UNEMPLOYMENTEquilibrium unemploymentfrictional (search) unemployment

  • Average duration of unemploymentOWage ratePeriod of search

    fig

  • CAUSES OF UNEMPLOYMENTEquilibrium unemploymentfrictional (search) unemploymentstructural unemployment

  • CAUSES OF UNEMPLOYMENTEquilibrium unemploymentfrictional (search) unemploymentstructural unemploymentchanging pattern of demand

  • CAUSES OF UNEMPLOYMENTEquilibrium unemploymentfrictional (search) unemploymentstructural unemploymentchanging pattern of demandregional unemployment

  • CAUSES OF UNEMPLOYMENTEquilibrium unemploymentfrictional (search) unemploymentstructural unemploymentchanging pattern of demandregional unemploymenttechnological unemployment

  • CAUSES OF UNEMPLOYMENTEquilibrium unemploymentfrictional (search) unemploymentstructural unemploymentchanging pattern of demandregional unemploymenttechnological unemploymentseasonal unemployment

  • Unemployment and InflationAggregate Demand, Aggregate Supply and the Price Level

  • AD, AS and the PRICE LEVELThe aggregate demand curve

  • Aggregate demand and aggregate supplyOPrice levelNational outputWhy the AD curve slopes downwardsforeign trade effectreal balance effectinterest rate effectThe shape of the AD curveShifts in the AD curve

    fig

  • AD, AS and the PRICE LEVELThe aggregate demand curveThe aggregate supply curve

  • Aggregate demand and aggregate supplyOPrice levelNational outputshort-run and long-run AS curvesthe shape of the AS curveshift in the AS curve

    fig

  • AD, AS and the PRICE LEVELThe aggregate demand curveThe aggregate supply curveEquilibrium

  • Aggregate demand and aggregate supplyOPrice levelNational outputASAD

    fig

  • AD, AS and the PRICE LEVELThe aggregate demand curveThe aggregate supply curveEquilibriumshifts in the AD curve

  • AD, AS and the PRICE LEVELThe aggregate demand curveThe aggregate supply curveEquilibriumshifts in the AD curveshifts in the AS curve

  • Unemployment and InflationInflation

  • INFLATIONDefining inflationInternational experience of inflation

  • Inflation rates for selected countries(average % per annum)

    Country

    197181

    198291

    19922001

    USA

    Japan

    Germany

    France

    Italy

    UK

    Sweden

    Netherlands

    Belgium

    EU15

    OECD

    8.4

    8.8

    5.2

    10.4

    15.2

    13.9

    9.7

    7.2

    7.7

    11.1

    10.2

    4.1

    2.0

    2.4

    5.4

    8.6

    6.0

    7.4

    2.1

    4.1

    5.9

    7.4

    2.7

    0.5

    2.3

    1.6

    3.4