Unemployment

In economics, a person who is able and willing to work yet is unable to find a paying job is considered unemployed. The unemployment rate is the number of unemployed workers divided by the total civilian labor force, which includes both the unemployed and those with jobs (all those willing and able to work for pay). In practice, measuring the number of unemployed workers actually seeking work is notoriously difficult. There are several different methods for measuring the number of unemployed workers. Each method has its own biases and the different systems make comparing unemployment statistics between countries, especially those with different systems, difficult.

Types of Unemployment

• Cyclical (Deficient Demand) unemployment: When there is not enough aggregate demand for the labour.
• Frictional: When moving from one job to another, the unemployment temporarily experienced when looking for a new job.
• Structural: Experienced when the structure of an industry or skill demands changes in mainly:
• switching from a declining industry to a rapidly growing one.
• Pace of change in the tastes of people.
• Regional Structure of industry.
• Technological: Caused by the replacement of workers by machines or other advanced technology.
• Classical (Real-wage): When real wage for a job are set above the market-clearing level, commonly government (as with the minimum wage) or unions, although some (such as Murray Rothbard, America's Great Depression p. 45) suggest that even social taboos can prevent wages from falling to the market clearing level.
• Marxian: when unemployment is needed to motivate workers to work hard and to keep wages down, to preserve profitability.
• Seasonal: When an industry only is in demand certain times. For example, ski slopes, Shopping Mall Santas.

For a more detailed discussion, see the entry on types of unemployment.

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