Question

Explain the difference between: discouraged workers, long term unemployed workers and underemployed workers

Answer 1

Answer:-

Underemployed workers are those workers who are highly skilled but working for a low wage or workers who want to work full time but doing part-time jobs.

A discouraged worker is a person who is willing to work and eligible for work but currently unemployed as he is not able to find employment in the last four weeks. These workers have given up on searching for a job because they found no suitable employment.

Labor force includes all those people who are capable of working or being employed. It is calculated by using following formula:

LF = E+U

Where,

LF is the labor force, E is the number of employed people and U is the number of unemployed people who are capable of working.

Underemployed workers are part of a labor force as they are still contributing to overall output of an economy. However, there can be an increase in the overall productivity of an economy if these workers find job as per their talent and ability to work.

Discouraged workers are not a part of labor force as they are no longer looking for employment in an economy.

Unemployed people are the ones that are currently unemployed, actively looking for a job and willing to work at prevailing wage rate in an economy

To be considered unemployed, a person must have looked for work during the last four weeks. Since, discouraged worker has decided not to take any employment, so he/she cannot be considered as unemployed.

Underemployed worker is not considered unemployed as he is employed but working in low paying jobs. However, unemployed workers who are looking for a job can considered to be underemployed.