EconGuru Economics Guide » Unemployment

Unemployment

Unemployment is the condition of not having a job for people who are actively looking for one. More exactly, it's the percentage of the total labor force that is unemployed but actively seeking employment and willing to work. It is measured by means of unemployment rate determined by the function:

Unemployment Rate = (Unemployed Workers / Labor Force) * 100%

Unemployed workers are those who are willing and able to work for pay but are unable to find jobs. Labor force includes all those who are willing and able to work for pay - both unemployed and employed. People with no jobs and not looking to find one are not considered in the labor force.

Major types of unemployment:

• Frictional unemployment - temporary unemployment when workers are moving from one job to another
• Structural unemployment - unemployment caused by mismatched skills or geographical locations
• Cyclical unemployment - unemployment caused by economic cycles in which aggregate demand for labor drops

For more information about macroeconomic unemployment, please take time to read another article.