Unemployment and its Causes

    OCR
    GCSE

    Analysis of the labour market focuses on the disequilibrium between the supply of and demand for labour. Candidates must distinguish between the International Labour Organisation (ILO) Labour Force Survey and the Claimant Count as measures of unemployment, acknowledging the discrepancies caused by inactive groups and the 'hidden unemployed'. The study necessitates a rigorous examination of the causes of unemployment—categorised into demand-deficient (cyclical) and supply-side (structural, frictional, seasonal, real-wage)—and the evaluation of the Natural Rate of Unemployment (NRU). Furthermore, the macroeconomic consequences, including the concept of hysteresis and the trade-off with inflation (Phillips Curve analysis), are central to high-level assessment.

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    Objectives
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    Exam Tips
    4
    Pitfalls
    4
    Key Terms
    4
    Mark Points

    Learning Objectives

    What you need to know and understand

    • ILO Definition: Without a job, have been actively seeking work in the past 4 weeks, and are available to start work in the next 2 weeks.
    • Formula: Unemployment Rate = (Unemployed / Labour Force) × 100.
    • Cyclical Unemployment: Caused by a fall in Aggregate Demand (recession).
    • Structural Unemployment: Caused by decline in specific industries, skills mismatch, or automation.
    • Frictional Unemployment: Transitional unemployment as workers move between jobs.

    Marking Points

    Key points examiners look for in your answers

    • Award marks for precise definition of unemployment: willing, able, and actively seeking work.
    • Credit analysis that links a fall in Aggregate Demand explicitly to derived demand for labour (Cyclical).
    • Responses must distinguish between geographical and occupational immobility when explaining structural unemployment.
    • Evaluation must weigh the extent of impact on specific economic agents (e.g., fiscal burden on government vs loss of skills for individuals).

    Examiner Tips

    Expert advice for maximising your marks

    • 💡Always quote specific data from the provided case study/table to support analysis (AO2).
    • 💡When evaluating, consider the 'magnitude' of the cause or the 'duration' of the unemployment.
    • 💡Use the term 'derived demand' to secure technical vocabulary marks when discussing labour markets.
    • 💡Structure 6-mark analysis questions with two distinct, developed chains of reasoning rather than a list of undeveloped points.

    Common Mistakes

    Pitfalls to avoid in your exam answers

    • Confusing the 'workforce' with the 'total population' when calculating unemployment rates.
    • Asserting that technological advancement permanently increases unemployment without considering new job creation.
    • Failing to distinguish between voluntary (frictional) and involuntary (cyclical/structural) unemployment.
    • Describing the consequences of inflation instead of unemployment due to confusion over macroeconomic objectives.

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    Key Terminology

    Essential terms to know

    Likely Command Words

    How questions on this topic are typically asked

    State
    Calculate
    Explain
    Analyse
    Evaluate
    Discuss

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