Economics Ilo and Claimant Count

4.A crucial issue in understanding the impact of the recent recession, and previous recessions, on the economy is the impact it has on the labour market. The rise in unemployment in the recent recession has been smaller than that observed during the 1979‐81 recession, despite the fact the drop in GDP has been larger. The following questions explore the recession’s impact on unemployment in more detail. (Hint: Chapter 28 of Mankiw & Taylor may be helpful in answering this question.) A) i.using the data in the Excel file provided, graph the two most commonly used measures of the unemployment rate (the Claimant Count measure and the International Labour Office (ILO) measure taken from the Labour Force Survey) on the same chart, ensuring that you label this chart appropriately. ii.how does the unemployment rate based on the ‘Claimant Count’ differ from the ONS’s preferred measure of the unemployment rate (i.e. the International Labour Office (ILO) measure taken from the Labour Force Survey)? iii.Neither measure includes discouraged workers – how can this group be defined? Do you think that it matters that discouraged workers are omitted from official measures of unemployment? [Marks available 15%] b) Explain, in your own words, what changes have been observed in the size of the following groups in the labour market in this recession and suggest why this might have happened. (The November 2012 issue of the Bank of England Inflation Report available here: http://www.bankofengland.co.uk/publications/Documents/inflationreport/ir12nov.pdf and previous BoE Inflation reports may prove helpful.) i. Private and public sector employment ii. Part time employment iii.