Question

Question: Description of Unemployment

*definition,

*types,

*effects

Answer 1

Unemployment - When a person is of age above 16 years or in working age group as per the labor law of the country concerned, and he is actively looking and searching for a job in the job market but has not been able to be in paid employment or self-employment.

Types of unemployment:

i) Frictional unemployment - When a person is switching one job to another and there exists a period of time the person is not employed

ii) Structural unemployment - This arises when workers' skills do not match with the jobs that are available.

iii) Cyclical unemployment - Unemployment during the economic slowdown

iv) Search unemployment - Unemployment due to continuous searching for a desirable job rather than accepting the one offered

v) Regional unemployment - Unemployment in a specific geographical region

vi) Casual unemployment - Unemployment due to the choice of not working

vii) Technological unemployment - Unemployment due to technological change - such as the emphasis on automation of processes has caused joblessness for one would be doing manual jobs

viii) Seasonal unemployment - Unemployment due to change of seasonal requirement. Such as people in jobs due to summer tourism become unemployed as summer season passes.

Effect of unemployment:

1) Poor standard of living

2) Economic distress

3) Low savings

4) Fall in demand for goods & services - a lower economic growth rate

5) Increased government expenditure on welfare programs, which eventually reduces availability of resources for undertaking big socio-economic infrastructural projects.

6) Low capital formation

7) Low labor productivity