Economic question help?

Question

I was asked a couple of questions in class the other day

1. When would there be periods of high unemployment?

and

2. Why are students over 15 not considered to be unemployment?

?????

thanks

Answer 1

Q1.

Periods of high unemployment can be caused by many factors including - falling demand for goods/services in the economy (called cyclical unemployment) this is usually caused by low economic growth due to high prices (inflation), periods of technological change i.e. IT Revolution (called structural unemployment) change the structure of the economy - so people must retrain, also times when the government intervenes in the economy by setting a high minimum wage - making labour expensive so demand for it falls.  You can link your answer to any of the types of unemployment.  If you are looking for an example - in the early 1990's the "recession we had to have" is an example of a period of high unemployment - caused by the trade cycle.

Q2.

Students under 15 are not considered unemployed as they are not part of the labour force.  The cynical reason is that the government does not want to count this in their official statistics (they want low unemployment).  This is an example of hidden unemployment.  My students are fascinated to learn that the definition of unemployed only includes those who are actively looking for work - so if a uni student, stay at home mum or a person who has stopped looking as they are discouraged they are not included in the official statistics.  A less cynical answer is that society values education (as this is the main way of developing your human capital in an economy - the quality of labour increases) and so wants to encourage education and not include it in official rates of unemployment.  Those under 15 usually need parental permission to work and is a big improvement from early 1900's  when children worked as soon as they could to support their family - we know have child labour laws to protect children.

I hope this helps!