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UNEMPLOYMENT
Asst.Prof.Teresita Balgos )(
2/15/2016
Outline
Asst.Prof.Teresita Balgos )(
2/15/2016
2/15/2016
%
E
m
p
l
o
y
e
d
50
40
30
20
10
0
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
Year
Agriculture
Asst.Prof.Teresita Balgos
)(
Manufacturing
Non-government services
Government
services
2/15/2016
2000
2012 r
2013 r
2012 r
2013 r
327,100
PHILIPPINES
280,880
302,804
2014
185,351
167,692
177,084
103,346
109,603
121,018
57,800
59,703
60,827
Industry
574,604
605,646
a
643,570
353,725
373,779
a
388,308
Services
304,158
326,833
350,322
180,875
187,976
195,885
851,486
933,712
986,681
501,123
533,554
548,170
255,581
266,586
299,677
162,129
163,931
159,645
Industry
758,746
902,023
938,804
458,323
542,584
553,570
Asst.Prof.Teresita
Balgos )(
Services
878,880
946,658
1,003,268
514,316
534,468
2/15/2016
550,071
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Men staying as students longer, becoming retirees earlier and living longer, and
taking over homemaker responsibilities
Asst.Prof.Teresita Balgos )(
2/15/2016
Determinants of Employment
1.
2.
3.
4.
5.
6.
7.
8.
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Production Function
Demand for Labour : Derived Demand
The substitution Effect of Labour : if the
wage rate falls, employers will employ more
labour because it is cheaper
Q = f (K, L)
Asst.Prof.Teresita Balgos )(
2/15/2016
Demand
Supply
Equilibrium Wage Rate
Disequilibrium Wage Rate
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Unemployment
Asst.Prof.Teresita Balgos )(
2/15/2016
Key Issues
Asst.Prof.Teresita Balgos )(
2/15/2016
Measuring Unemployment
A Working Definition of Unemployment
People able, available and willing to find work
and actively seeking work but not employed
The unemployed are included in the labour
force
Asst.Prof.Teresita Balgos )(
Measuring Unemployment
The Labour Force Survey (ILO measure)
An internationally agreed standard measure of
unemployment
Must have actively sought work in the previous
four weeks and be available to start work
immediately
Higher figure than the claimant count
approximately half a million higher
Higher because there are limits on who can
claim unemployment benefit so the true
level of unemployment is higher than the
official figures suggest
Asst.Prof.Teresita Balgos )(
2/15/2016
x 100
= 13 946 000
x 100
21 392 000
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
2012
2013
2014
3,008
962
177
3,011
928
180
3,182
1,004
202
7
163
9
152
11
156
4
152
4
164
4
198
522
207
122
19
29
525
209
135
18
30
535
207
136
18
31
9
12
48
7
10
52
5
9
58
162
107
35
18
202
163
110
39
19
204
173
106
40
20
215
2/15/2016
45
-
42
-
44
-
2012
37,600
10,660
1,432
250
3,112
89
59
2,232
6,864
2,617
1,571
338
437
170
189
937
1,958
1,200
438
328
2,149
2013
38,118
10,429
1,407
250
3,159
94
60
2,373
7,105
2,734
1,607
344
448
173
194
1,016
1,965
1,226
469
347
2,189
566
2
524
4
2014
a
38,651
10,405
1,396
239
3,212
86
51
2,578
7,248
2,686
1,694
352
491
168
209
1,085
1,964
1,254
480
349
2,187
2/15/2016
508
7
UNEMPLOYMENT :
ISSUES, DIMENSIONS, AND ANALYSES
Types of Unemployment
1. Normal Unemployment- Unemployment due to low or no demand for workers.
2. Frictional Unemployment- Unemployment due to being temporarily between jobs or looking for a
first job. It is a permanent feature of labour markets, represents about 3% of the labour force at all
times.
3. Structural Unemployment- Unemployment due to a mismatch between people and jobs. This type of
unemployment occurs because of gradual changes in the economy. Long term adjustments in what,
how, and where products are produced cause such unemployment.
4. Technological Unemployment- Unemployment due to technology
5. Cyclical Unemployment- Unemployment due to the ups and downs of economies and businesses,
causing unemployment to rise and fall.
6. Seasonal Unemployment- Unemployment due to the seasonal nature of some occupations and
Asst.Prof.Teresita
2/15/2016
industries Balgos )(
New hires
Recalls
Job-losers
Lay-offs
Quits
Discouraged
workers
Retiring
Temporarily
leaving
Taking
a job
Asst.Prof.Teresita Balgos )(
Unemployed
Re-entrants
New entrants
Out of the
labour force
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Philippines
62,870
61,777
64,591
63.8
63.8
63.7
93.4
92.5
93.4
6.6
7.5
6.6
17.5
19.5
17.9
2/15/2016
COUNTRY
Indonesia
Malaysia
Philippines
Singapore
South Korea
Thailand
China
Periodicity
Semi-annual
Monthly
Quarterly
Quarterly
Monthly
Monthly
Quarterly
2015 p
2014
Jul
Aug
Jul
Aug
Sep
Oct
Nov Dec
5.9
2.8
6.7
2.0
3.4
1.0
4.1
2.7
3.5
0.7
-
2.7
3.5
0.8
-
5.8
3.0
6.6
1.9
3.4
1.1
4.1
6.2
3.2
6.5
2.0
3.7
1.0
4.0
3.2
3.6
1.0
-
3.2
3.5
0.8
-
3.1
5.7
2.0
3.4
0.9
4.1
3.4
0.9
-
2.7
6.0
2.0
3.5
0.8
4.1
2.7
3.4
0.6
-
3.0
3.5
0.6
-
3.2
3.9
0.8
-
3.0
3.7
1.0
-
3.0
6.4
1.8
3.7
0.9
4.1
3.1
3.9
0.9
-
3.1
3.9
0.8
-
Note: Data for other Asian countries cannot be found in the website used. If other website shall be used,
methodology may differ, thus, not comparable.
p Preliminary.
Sources of data: Philippine Statistics Authority,
Labor
Force Survey.Balgos )(
Asst.Prof.Teresita
http://www.tradingeconomics.com.
3.4
-
2/15/2016
Types of Unemployment
Seasonal
Regular seasonal changes in
employment / labour demand
Affects certain industries more than
others
Asst.Prof.Teresita Balgos )(
2/15/2016
Types of Unemployment
Frictional
Transitional unemployment due to
people moving between jobs: Includes
people experiencing short spells of
unemployment
Includes new and returning entrants into
the labour market
Imperfect information about available
job opportunities can lengthen the
period of someones job search
Asst.Prof.Teresita Balgos )(
2/15/2016
Structural Unemployment
Structural
Arises from the mismatch of skills and
job opportunities as the pattern of
labour demand in the economy changes
Occupational immobility of labour
Often involves long-term unemployment
Prevalent in regions where industries go
into long-term decline
Good examples include industries such as
mining, engineering and textiles
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
2012
37,600
10,660
1,432
250
3,112
89
59
2,232
6,864
2,617
1,571
338
437
170
189
937
1,958
1,200
438
328
2,149
2013
38,118
10,429
1,407
250
3,159
94
60
2,373
7,105
2,734
1,607
344
448
173
194
1,016
1,965
1,226
469
347
2,189
566
2
524
4
2014
a
38,651
10,405
1,396
239
3,212
86
51
2,578
7,248
2,686
1,694
352
491
168
209
1,085
1,964
1,254
480
349
2,187
2/15/2016
508
7
Cyclical unemployment
Cyclical (Keynesian)
Asst.Prof.Teresita Balgos )(
2/15/2016
Real Wage
Level
Supply of
Labour
W1
W2
P1
P2
SRAS
AD1
LD2
AD2
Y2
Y1
Yfc
Asst.Prof.Teresita Balgos )(
E2
Demand for
Labour
YFC2
E1
Employment of Labour
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
The end of full-employment for Japan during the last ten years
Asst.Prof.Teresita Balgos )(
2/15/2016
2/15/2016
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
2/15/2016
Consequences
of
falling
unemployment
The circular flow and the multiplier:
Incomes flowing into households will grow
Falling unemployment adds to demand and creates a positive
multiplier effect on incomes, demand and output.
The balance of payments:
When incomes and spending are growing, there is an increase in the
demand for imports. Unless this is matched by a rise in export sales,
the trade balance in goods and services will worsen
Asst.Prof.Teresita Balgos )(
2/15/2016
2/15/2016
Supply factors
Asst.Prof.Teresita Balgos )(
2/15/2016
Falling unemployment
Sustained economic
growth since 1992
The full-employment
Asst.Prof.Teresita Balgos )(
Increased spending on
education
2/15/2016
Taking these workers into account, the unemployment rate in August, 2002
would increase from 5.7% to 9.5%
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Frictional Unemployment
Asst.Prof.Teresita Balgos )(
2/15/2016
Minimum Wage
Asst.Prof.Teresita Balgos )(
2/15/2016
Minimum Wage
Asst.Prof.Teresita Balgos )(
2/15/2016
Unions
Asst.Prof.Teresita Balgos )(
2/15/2016
Unions
2/15/2016
Efficiency Wages
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
Asst.Prof.Teresita Balgos )(
2/15/2016
2012
2013
2014
3,008
962
177
3,011
928
180
3,182
1,004
202
7
163
9
152
11
156
4
152
4
164
4
198
522
207
122
19
29
525
209
135
18
30
535
207
136
18
31
9
12
48
7
10
52
5
9
58
162
107
35
18
202
163
110
39
19
204
173
106
40
20
215
2/15/2016
45
-
42
-
44
-
2012
37,600
10,660
1,432
250
3,112
89
59
2,232
6,864
2,617
1,571
338
437
170
189
937
1,958
1,200
438
328
2,149
2013
38,118
10,429
1,407
250
3,159
94
60
2,373
7,105
2,734
1,607
344
448
173
194
1,016
1,965
1,226
469
347
2,189
566
2
524
4
2014
a
38,651
10,405
1,396
239
3,212
86
51
2,578
7,248
2,686
1,694
352
491
168
209
1,085
1,964
1,254
480
349
2,187
2/15/2016
508
7
2012 r
2013 r
2013 r
2014
85,834
88,646
87,964
57,130
56,664
50,837
2014
Industry
Services
Asst.Prof.Teresita Balgos )(
95,852
98,309 100,934
2/15/2016
Asst.Prof.Teresita Balgos )(
At Current Prices
110,877
116,942
130,435
133,379
139,656
148,461
161,972
175,711
192,155
205,385
226,493
228,919
249,854
261,033
280,880
302,804
327,100
2/15/2016