English for Economists

Besides prolonged unemployment seriously lowers the value of a person’s human capital, i.e. the value of a person’s education and acquired skills. When unemployment is prolonged, human capital depreciates or deteriorates – skills lose their value.

A rise in the unemployment rate also causes an increase in the amount of crime. When people cannot earn an income from legitimate work, they sometimes turn to crime. A high crime rate is also one of the costs of high unemployment.

A final cost that is difficult to quantify is the loss of self-esteem that is human dignity, which afflicts people.

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To check your comprehension do the tasks that follow.

Types of Unemployment

The unemployment rate is determined by three different types of unemployment: frictional, structural, and cyclical. Understanding these conceptual categories of unemployment aids in understanding and formulating policies to ease the burden of unemployment. In fact, each type of unemployment requires a different policy prescription to reduce it.

For some unemployed workers, the absence of a job is only temporary. At any given time, some people with marketable skills are fired, and others voluntarily quit jobs to accept or look for new ones. And there are always young people who leave school and search for their first job. Workers in industries, such as construction, experiencing short periods of unemployment between projects and temporary layoffs are common. Other workers are seasonally unemployed. For example, ski resort workers will be employed in the winter but not in the summer, and certain crops are harvested “in season.” Because jobs requiring their skills are available once the unemployed and the job vacancies are matched, such workers are considered “between jobs.” This type of unemployment is called frictional unemployment, and it is not of great concern.

The fact that job market information is imperfect influences frictional unemployment in the economy. Because it takes time to search for the information required to match employer and employees, some workers will always be frictionally unemployed. Frictional unemployment is therefore a normal condition in an economic system permitting freedom of job choice. Improved methods of distributing job information through job listings on the Internet can help unemployed workers find jobs more quickly and reduce frictional unemployment.

Unlike frictional unemployment, structural unemployment is not a short-term situation. Instead, it is long-term, or possibly permanent unemployment resulting

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from the non-existence of jobs for unemployed workers. Structural unemployment is unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities. Note that changing jobs and lack of job information are not problems for frictionally unemployed workers. While frictionally unemployed workers have marketable skills, structurally unemployed workers require additional education or retraining. Changes in the structure of the economy create the following three causes ofstructural unemployment.

First, workers might face joblessness because they lack the education or the job-related skills to perform available jobs. This type of structural unemployment particularly affects teenagers and minority groups, but other groups of workers can be affected as well.

Second, the consuming public may decide to increase the demand for Mazda RX-7s and decrease the demand for Chevrolet corvettes. This shift in demand would cause U.S. auto workers who lose their jobs and find jobs in another idustry in another location.

Third, implementation of the latest technology may also increase the pool of structural unemployment in a particular industry and region. For example, the U.S. textile industry, located primarily in the South, canfight less expensive foreigntextile imports by installing modern machinery.

Cyclical unemployment is directly attributable to the lack of jobs caused by the business cycle. Cyclical unemployment is unemployment caused by the lack of jobs during a recession. WhenrealGDP falls, companies close, jobs disappear, and workers scramble for fewer available jobs. Similar to the game of musical chairs, there are not enough chairs (jobs) for the number of players (workers) in the game.

Because both frictional and structural unemployment are present in good and bad times, full employment does not mean “zero percent unemployment.” Full employment is the situation in which an economy operates at an unemployment rate equal to the sum of the frictional and structural unemployment rates. Full employment therefore is the rate of unemployment that exists without cyclical unemployment.

Ex. 1. Choose the right answer according to the text and your background knowledge. Explain your choice.

1.The number of people officially unemployed is not the same as the number of people who can’t find a job because:

a.people who have jobs continue to look for better ones;

b.the armed forces is included;

c.discouraged workers are not counted;

d.none of the above;

e.all of the above.

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2.Frictional unemployment refers to:

a.unemployment related to thee ups and downs of the business cycle;

b.workers who are between jobs;

c.people who spend relatively long periods out of work;

d.people who are out work and have no job skills.

3.A mismatch of the skills of unemployed workers and the skills required for existing jobs is defined as:

a.involuntary unemployment;

b.cyclical unemployment;

c.structural unemployment;

d.frictional unemployment.

4.Unemployment caused by a recession is called:

a.structural unemployment;

b.frictional unemployment;

c.involuntary unemployment;

d.cyclical unemployment.

5.Full employment occurs when the rate of unemployment consist of:

a.seasonal plus structural plus frictional unemployment;

b.cyclical plus frictional unemployment;

c.structural, frictional, and cyclical unemployment;

d.none of the above.

Ex. 2. Scan the text and say:

a)what changes in the economy create structural unemployment;

b)if economists consider a certain level of structural unemployment inevitable;

c)why frictional unemployment is considered to be persistent;

d)if there is any difference between frictional and structural unemployment;

e)what is meant by cyclical unemployment;

f)if full employment means absolute absence of unemployment;

g)what professions are obsolete nowadays and why;

h)what is the goal of full employment;

i)if there any advantages and disadvantages of being unemployed.

Ex. 3. Present the situation in job market in your country regarding different types of unemolyment.

WRITING

Write an abstract of the previous text.

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TRANSLATION

A. Translate the text into Russian.

W.H. Philips and the Philips Curve

A.W.H. Phillips was an economist whose reputation was based largely on a single paper on the right topic published at the right time. In the late 1950-s, the connection between inflation and unemployment ranked as a major unsolved problem of macroeconomic theory. The curves that Phillips drew in his famous article in "Economica" suggested a simple, stable relationship between inflation and unemployment.

The central proposition of the Phillips curve theory is: other things remaining constant, the higher the unemployment rate, the lower is the inflation rate.

Phillips's original idea was that the unemployment rate indicates the state of demand pressure in the economy. When unemployment is low, real GNP is above capacity, bottlenecks arise, and inflation accelerates. When unemployment is high, real GNP is below capacity, and inflation diminishes.

In the early 1960s, the Phillips curve became a central element of macroeconomics.

B. Translate into English.

Безработица – это одна из серьезных проблем, с которыми сталкивается любое общество. Как и любое явление, она не может быть оценена однозначно. С одной стороны, она дает людям время и возможность найти подходящую работу. С другой стороны, состояние безработных приводит людей к поиску незаконных заработков. Последствия безработицы весьма внушительны. Во-первых, это отсутствие заработка. Во-вторых, это потеря приобретенных профессиональных знаний и человеческого достоинства. Очевидно, что человек, разочаровавшийся найти высокооплачиваемую работу, соглашается на сомнительные предложения. Кроме того, безработица толкает людей к совершению преступлений. Если безработица длительная, она вызывает серьезные социальные и психологические проблемы не только для безработного, но и для его семьи.

LISTENING

Kate Barker is the Chief Economic Adviser of the Confederation of British Industry, and a member of the panel of economic advisers to the British Treasury. You will hear her talking about the things that will need to change if labour markets become increasingly flexible.

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Ex. 1. Listen to Part One of the interview and answer the questions.

1.A 'flexible labour market' is one in which:

a.workers are able to do a variety of jobs.

b.it is easy for companies to hire non-permanent staff.

c.workers arc free to choose the hours they work.

2.What is the advantage of a flexible labour market for employers?

3.What does 'the more flexible labour market is considered to have encouraged inward investment' mean?

4.Kate Barker says that three things will have to be rethought or reconsidered if the British labour force is going to remain more flexible.

Complete the gaps:

In particular, the structure of (1)…………………………needs to be revisited, if you have people moving between employments and unemployment much more quickly. The structure of (2)……………………………needs to be revisited, if you have people no longer working for a long time for the same employer, and finally in Britain we tend to have a very high level of owneroccupation – more people (3)………………………….and they borrow a great deal of money in order to pay for that. It would be much more logical to have a big (4)………………………., if you want to have a very flexible labour market.

Ex. 2. Listen to Part Two of the interview. According to what Kate Barker says, which is the correct answer in each case?

1.In a flexible labour market, such as that in the USA,

a.unemployment falls in a downturn or recession.

b.unemployment rises in a downturn or recession.

2.In a flexible labour market

a.unemployment rises during an economic upturn.

b.temporary employment rises during an economic upturn.

c.permanent employment rises during an economic upturn.

3.In a flexible labour market, there are

a.badly-paid workers who have frequent periods of unemployment.

b.well-paid workers who have frequent periods of unemployment.

c.10% of earners who have frequent periods of unemployment.

4.Wages are falling

a.because of the deregulation of the labour market.

b.because there is now a kind of 'underclass' of workers.

c.because of competition from Asian countries.

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Ex. 3. Listen to Part Three of the interview and answer these questions.

1.What are the two measures that Kate Barker suggests governments should take to help the long-term unemployed?

2.What, according to Kate Barker, is a common attitude among employers towards long-term unemployed people?

SPEAKING

A.

Read the dialogue in pairs and do the following exercises.

1 – I hear that Sam lost his job. Did you hear that, too? 2 – I did hear something about his job being abolished.

1 – What a terrible thing to happen now, just when he and Helen are expecting their first baby!

2 – It is a shame, I’ll admit, but I told Sam months ago to get out of that place where he works and get another job. I had a feeling that the company wasn’t very stable financially.

1 – You mean it’s not a strong company? I’d always thought it was one of the strongest around.

2 – If you’ve been reading the news in the financial section, you could see that the company was headed1 for trouble. I wouldn’t be surprised to see it go bankrupt before the end of the year.

1 – It sure is too bad. Is there anything we can do for Sam?

2 – I’m goingto call himthis afternoon. I heard yesterdaythat there’s goingto be an opening2 in the section where I work. He can get his application in3 today.

1 – I’ll check things out4 with my boss, too. There may be something open in one of the departments over in Fairmont.

Notes:

1.to head – to move or go in a certain direction;

2.opening – place or position that is vacant;

3.to get in – to submit;

4.to check out – to prove true.

Ex. 1. Conversation in context

1.What is Sam’s relationship to the speakers?

2.Where does the discussion take place?

3.Is Sam present?

4.Can the speakers help Sam?

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Ex. 2. Personal application

1.Did you ever lose your job? If so, describe how it felt.

2.What are the most financially stable companies in your country?

3.Do you get along well with your boss?

4.Are there any openings where you work?

5.Would your friends help you find a job?

B.

Speak on:

–the basic cause of the business cycle;

–the phases of the business cycle;

–business cycle theories;

–the definition of unemployment, its types

–the reasons for unemployment;

–the impact of technology changes on unemployment;

–the geographic distribution of jobs;

–costs of unemployment;

–positive sides of frictional and structural unemployment;

–the goal of full employment;

–the Philips Curve.

VOCABULARY

boom n – экономический подъем business cycles – экономический цикл depreciate v – обесцениваться depression n – экономический спад deteriorate v – ухудшаться employment n – занятость

full ~ – полная занятость

expansion n–расширение; распространение gap n – разрыв

deflationary ~ – дефляционный разрыв hinder v – препятствовать

inputs n – затраты lay off v – увольнять

obsolete adj – устарелый output n – выпуск (продукции)

peak n – пик, высшая точка колебания

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recession n (syn.contraction,downturn)–спад производства, рецессия recovery n (syn. upturn, expansion) – восстановление, оживление, подъем seek v – искать

shortage n (syn. deficit) – недостаток, дефицит switch v – изменять направление; переключать temporary adj – временный

trough n – низшая точка, «дно» цикла turnover n – оборот капитала unemploymentn --безработица cyclical ~ – циклическая безработица

frictional ~ – фрикционная безработица structural ~ – структурная безработица

GLOSSARY

·Business cycle – alternating periods of economic growth and contraction, which can be measured by changes in real GDP.

·Cyclical unemployment – unemployment caused by the lack of jobs during a recession.

·Economic growth – an expansion in national output measured by the annual percentage increase in a nation’s real GDP.

·Frictional unemployment – unemployment caused by the normal search time required by workers with marketable skills who are changing jobs, initially entering the labour force, re-entering the labour force, or seasonally unemployed.

·Full employment – the situation in which an economy operates at an unemployment rate equal to the sum of the frictional and structural unemployment rates.

·Peak – the phase of the business cycle in which real GDP reaches its maximum after rising during a recovery.

·Recession – a downturn in the business cycle during which real GDP declines.

·Recovery – an upturn in the business cycle during which real GDP rises; also called an expansion.

·Structural unemployment – unemployment caused by a mismatch of the skills required for existing job opportunities.

·Trough – the phase of the business cycle in which real GDP reaches its minimum after falling during a recession.

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3.4. BANKING

DISCOVERING CONNECTIONS

1.Have you ever been to the bank? What did you go there for?

2.What different kinds of services do banks offer to the public?

3.How would you comment the saying “A banker is a man who lends you umbrella when the weather is fair, and takes it away from you when it rains”? Do you agree with it?

READING

Text 1

After reading the text choose the heading for each paragraph.

–Investment Banking

–Interest Rates

–Commercial Banking

–Universal Banking

–Central Banking

–Eurocurrency

1.A central bank fulfils a number of key roles in the economy, acting as a bankers’ bank and as a lender of last resort, being responsible for monetary creation, and having overall responsibility for monetary policy. The central bank can use control of interest rates, open market operations and required reserves to influence the monetary base and overall interest rates in the economy. In recent years, the interest rate has been prime instrument. By influencing the amount of real money in the economy, the central bank is able to influence aggregate demand, which in turn will influence prices. Thus the central bank has to balance the need to restrain inflation with the desire to allow economic growth.

2.Commercial or retail banks are businesses that trade in money. They receive and hold deposits, pay money according to customers' instructions, lend money, offer investment advice, exchange foreign currencies, and so on. They make a profit from the difference (known as a spread or a margin) between the interest rates they pay to lenders or depositors and those they charge to borrowers. Banks also create credit, because the money they lend, from their deposits is generally spent (either on goods or services, or to settle debts), and in this way transferred to another bank account - often by way of a bank transfer or a

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