Measurement of Unemployment (Cambridge International IGCSE Economics)
The Claimant Count and Labour Force Survey
Spec point —
4.7.2· How unemployment is measured – claimant count and labour force survey – and the formula for the unemployment rate.
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Unemployment is often measured using two different approaches
- The International Labour Organisation (ILO) Survey
- The Claimant Count
The Differences Between the ILO Labour Force Survey and the Claimant Count
| The ILO Labour Force Survey | The Claimant Count |
|---|---|
| - An extensive survey is sent to a random sample of ≈ 60,000 households every quarter - Respondents self-determine if they are unemployed based on the ILO criteria - Ready to work within the next two weeks - Have actively looked for work in the past one month - The same survey is used globally so it's useful for making international comparisons | - Counts the number of people claiming unemployment benefits - More stringent requirement to be considered unemployed than with the ILO survey - Requires claimants to meet certain criteria and excludes many e.g. - Those with savings - People who claim pensions - Married women who are looking for a job |
Calculating the Unemployment Rate
Spec point —
4.7.2· How unemployment is measured – claimant count and labour force survey – and the formula for the unemployment rate.
Three Metrics Are Commonly Used When Analysing the Labour Market in an Economy
| Unemployment rate | Employment rate | Labor force participation rate |
|---|---|---|
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The employment rate could be increasing even as the unemployment rate is increasing:
- May be caused by increased immigration which causes working age population to increase
- May be caused as people move from being economically inactive to employed
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Unemployment rates do not capture the hidden unemployment that occurs in the long term
- Workers look for a job but may eventually give up and become economically inactive
- This actually improves the unemployment rate as fewer people are actively seeking work
Worked Example The table provides information about a country's labour market
Population size 4000000 Labour force size 2400000 Number employed 1800000 Number of full-time students 200000 What is the unemployment rate of this country?
a) 15%
b) 25%
c) 50%
d) 75%
Step 1: Decide which information in the table is useful
- The number of full time students would not be included in the labour force size, so it is not useful (it is a distraction)
- The key infromation is the labour force size and the number employed
Step 2: Calculate the number of unemployed in the labour force
- Labour force - employed = unemployed
- 2,400,000 - 1,800,000 = 600,000 unemployed
Step 3: Calculate the unemployment rate
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