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In a Recession, Aspirational and Luxury Products Are Affected More Than Necessities. Explain Whether You Agree with This Statement Using Elasticity Concepts.

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HEFP Economics CW3

Sean Philip Lim, Group I

As youth unemployment increases back towards the psychological one million mark as of March 2013 (Evans, 2013), there has been considerable debate among the public and the government on the reasons behind increasing youth unemployment. This essay will aim to decipher the reasons behind high youth unemployment figures and its repercussions on the state. It will accomplish this by first defining and explaining the types of unemployment and the ways in which it is measured. It will then discuss the plausible reasons followed by evaluating the effectiveness of solutions that are currently being implemented or proposed. Lastly, it will provide a value judgement on the consequences that might occur should high youth unemployment remain. Unemployment is defined as the ‘number of jobless people who want to work, are available to work, and are actively seeking employment’ (Gillespie, 2007, p.347). As of January 2013, unemployment stood at 7.8% (BBC, 2013) marking a downward trend since October 2011. Within unemployment, there is youth unemployment, defined as the ‘percentage of unemployed young people (16-24) in relation to every young person who is active in the labour market’ (ONS, 2013). As of March 2013, youth unemployment stood at 21.2%, a rising trend since August 2004 as depicted in figure 1 (Evans, 2013).

Source: The Guardian, 2013 Figure 1 There are two methods of measuring unemployment from which youth unemployment figures are derived. The Claimant Count, which records individuals claiming Jobseekers Allowance (JSA) who have proved that they are actively looking for work (Economicsonline, 2013) and the International Labour Organisation (ILO) survey, which samples 60,000 households and tries to measure unemployment as a whole rather than those simply claiming JSAs.

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