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According to the Quarterly National Household Survey (QNHS) the rate of unemployment was 11.1% in the third quarter of 2014 - Leaving Cert Economics - Question (e) - 2015
Question (e)
According to the Quarterly National Household Survey (QNHS) the rate of unemployment was 11.1% in the third quarter of 2014. (i) Name one other commonly used source... show full transcript
Worked Solution & Example Answer:According to the Quarterly National Household Survey (QNHS) the rate of unemployment was 11.1% in the third quarter of 2014 - Leaving Cert Economics - Question (e) - 2015
Step 1
Step 2
State and explain the reasons for the differences between both sources.
Answer
The Live Register tends to overstate the true level of unemployment for several reasons:
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It includes individuals who are legitimately working part-time while also claiming social welfare benefits such as the Jobseeker's Benefit (JB) or Jobseeker's Allowance (JA). These individuals are not counted as unemployed despite receiving benefits.
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The Live Register also accounts for part-time workers who may work as little as three days a week, seasonal workers, and casual workers entitled to benefits. This group adds to the larger numbers in the Live Register.
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Additionally, there are individuals who may be working in the black economy while still claiming benefits, thus not being fully represented as unemployed.
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Finally, some individuals on the Live Register are signing on purely for 'PRSI credits' and are not seeking employment.
Step 3
Outline the possible economic effects which a rise in the level of employment, due to economic recovery in Ireland, may have on the Government current finances.
Answer
A rise in the level of employment during an economic recovery can have several positive effects on government finances:
Current Revenue Increases
More individuals in employment lead to increased income through PAYE taxes. With more people earning higher disposable incomes, they contribute more tax revenue, indirectly benefiting the government. Consequently, firms may see an increase in profits, resulting in higher corporate tax receipts as well.
Current Expenditure Decreases
With an increase in employment, fewer individuals will rely on social welfare payments. This reduction in the number of claimants would decrease government expenditure on social welfare, allowing for potential savings or reallocation of funds to other areas of the economy.