Full Employment

Cost of Achieving Full Employment

> Few associate costs > Require expansionary policies > Inflation - Explained by Phillips Curve (short run only) > External pressures - unsustainable CAD (or NFD). > Full employment - higher price of labour (medium to Long Run damage international competitiveness)

Full Employment

> Full employment has generally been regarded as that level of unemployment that exists when the government's economic growth objective of low inflation is achieved.

Benefits of Achieving Full Employment

> Improved material living standards > Improve non material living standards ( job satisfaction and self worth) >Reduced crime > Federal Budget (with less welfare payments are more tax receipts). > The reduction in the waste of 'human resources' (efficiency) that occurs when productive individuals are out of work.

Benefit of a High Unemployment Rate

> Low inflation

Categories of Unemployment

> Structural unemployment - Where the skills of the unemployed do not match the skills required by industry. the structure of industry has changed a proportion of the working age population lack skills required to obtain employment > Seasonal unemployment - Occurs for some workers, but only at certain times of the year e.g. fruit pickers, ski instructors, etc. > Frictional unemployment - Is when workers move from one job to another; and > Hard core unemployment - Those unable to find a job due to mental/physical characteristics that cause repeated job rejections. > Cyclical unemployment - Unemployment that relates to the cyclical trends in growth and production that occur within the business cycle

Government Responses to Categories of Unemployment

> Structural unemployment - training and education > Seasonal unemployment - training and education > Frictional unemployment - Limited > Hardcore unemployment - NDIS (National Disability Insurance Scheme) > Cyclical unemployment - Keynesian Policy (save when economic growth is high, spend when economic growth is low)

Underemployment

> The underemployed are those people that are classified as employed, but would prefer to be working more hours. > Usually, they're are working on a part time or casual basis when they would prefer to be working full time. > Many underemployed people experience similar problems to those unemployed; reduced incomes, greater stress and lower living standards.

Labour Force

All employed people of working age

Wealth Effect

The wealth effect is when the value of stock portfolios rise due to escalating stock prices, investors feel more comfortable and secure about their wealth, causing them to spend more.