Explain why measuring unemployment in a country is difficult. 

Discuss whether the most important consequence of unemployment is a loss of income for individuals.

Marks should be allocated according to the paper 1 markbands for May 2013 forward, part A.

Answers may include:

• definition of unemployment
• a diagram is not required for full marks, but candidates may use a labour market diagram, AD/AS diagram or Phillips curve diagram
• explanation of the challenges in measuring the exact number of people of working age who are without work, available for work and actively seeking work, resulting in inability to assess the underemployment/the hidden unemployment and the unreported employment in the informal(underground) economy
• examples of specific cases or countries where there is unemployment that may be difficult to measure.

Marks should be allocated according to the paper 1 markbands for May 2013 forward, part B.

Answers may include:

• definition of unemployment
• appropriate diagram(s) to show the loss of income due to unemployment and/or other consequences of unemployment
• explanation of the different economic (loss of income), social and political consequences of unemployment
• examples of the consequences of unemployment for individuals, communities and/or countries
• synthesis or evaluation (discuss).

Discussion may include: whether or not a loss of income is the most important consequence of unemployment that may be set in the context of other impacts of unemployment, such as reduced economic growth, reduced government revenues, increased government expenditures on unemployment benefits, personal and social problems, political instability, with judgment being made with regard to whether a loss of income is the most important impact of unemployment.

Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.

NB It should be noted that definitions, diagrams, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.

Candidates were generally able to explain the problems with measuring unemployment but had difficulties explaining these problems in economic terms and categorizing them according to whether they lead to underestimation or overestimation of the unemployment rate. Some candidates pointed out that the average unemployment rate for an economy ignores regional, ethnic, age and gender disparities but this was not considered relevant and candidates received no credit for this part of their answer since this is a problem of using the average rate to make judgements about the state of the economy and not a problem of measuring unemployment (government statisticians do use the surveys of the labour force to measure and provide data about the unemployment rates for different regions, age groups, genders and levels of education).

Candidates used many acceptable diagrams to show unemployment and the various economic consequences of unemployment. However, many otherwise well-prepared candidates focused on the economic consequences of unemployment and ignored the personal and social consequences.