Question

How is unemployment measured?

            Who measures it?

            *Are there different types of unemployment?

            What are some of the problems with our current unemployment rate measurement?

            How does a state of high unemployment affect the PPF curve?

            Institutional constraints on output. Relate this to the PPF curve.

            How does a state of high unemployment affect the production mix?

            Skills gap

                        Which type of unemployment does it affect?

                        Natural Rate of unemployment

Answer 1

The unemployment is measured by looking at low level of productivity or low incomes.

Labour force = sum of the employed + unemployed

Rate of Unemployment = proportion of labour force that is unemployed.

The unemployment rate is measured by the Bureau of Labor Statistics, or BLS which is a division of the Department of Labor. This government agency conducts a monthly survey and it is called the Current Population Survey. This survey involves 60,000 households.

Yes, there are different types of unemployment which are as follows:

Cyclical unemployment

Voluntary unemployment

Classical unemployment

Seasonal unemployment

Regional unemployment

Frictional unemployment

Structural unemployment

The Problem with current unemployment rate measurement is that if a person is not working but is looking for and available for work, even then The Bureau of Labor Statistics counts the person as unemployed.

Massive unemployment or a state of high unemployment in a country will be depicted on the PPC as under-utilization of resources. It means that the country's resources are not utilized when they could have been used for some productive purposes.

It will be shown on the PPC curve as a point that lies somewhere under the curve between the x-axis and y-axis. The PPC will not shift anywhere but this point lies within the PPC.

Effect of state of high unemployment on Production or output. The level of output produced is proportional to the level of the inputs—like capital and labor. So, increasing unemployment above its natural rate might lead to fall in output below its potential, and vice versa.

Structural unemployment is caused by a difference or mismatch between the skills that workers in the economy offer, and the skills demanded by the employers for the workers. This is also called as the skills gap.

The natural rate of unemployment, is the proportion of the workforce who are unemployed when an economy is in a steady state of full employment. So full employment doesn't mean Zero Unemployment. Natural rate of unemployment is a long run phenomenon.