Unemployment

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• Unemployment occurs when a person who is actively searching for employment and ready to accept work at current wage rate and still unable to find work.
• It is used as a measure of the health of the economy.
• It has been a burning problem of modern societies, whether developed or undeveloped.
• It is measured in terms of unemployment rate = no. of unemployed/total labour force

Types

Voluntary Unemployment

Frictional Unemployment

• Temporary phenomenon,
• Workers temporarily out of work while changing jobs
• Strikes and lockouts
• It is due to difficulties in getting workers and vacancies together.

Casual Unemployment

• Where workers are employed on a day-to-day basis
• Occurring due to short-term contracts, which are terminable any time

Seasonal Unemployment

• Some industries and occupation in which production activities are seasonal in nature
• Agro-based industrial activities like sugar mills etc.
• Offer employment only for a certain period of time in a year
• Can find in any country, causes wastage of resources,

Structural Unemployment

• Due to structural changes in the economy, it taken place
• Decline in demand for production lead to reduction in its manpower requirements
• E. g. improvement of transportation in Towns, tongas become out dated and tonga operators become unemployed, therefore, they need to search jobs in any other industry

Technological Unemployment

• It arise as a result of technological improvement
• Due to improvement in machinery, production methods, some workers are replaced by Machines
• e. g. due to the arrival of computers, typewriters lost their jobs.

Cyclical Unemployment

• Trade cycles, recessionary and depressionary phases
• Deflationary period, demands decline, production decreased and need to reduced workers
• Unemployment caused by insufficiency of effective demand
• Short term phenomenon
• Increasing total expenditure and pushing up the level of effective demand, can reduced this kind of unemployment

Chronic Unemployment

• Unemployment tends to be a long-term feature of a country it is called chronic unemployment.
• Underdeveloped country
• Vicious circle of poverty
• High population growth
• Backward or primitive technology
• Low capital formation, are causes for this

Disguised Unemployment

• Situation of employment with surplus manpower, some workers have zero marginal productivity, removal of them will not affect the volume of total output
• Suppose, for one work four man work effectively, if there are six people involved with that work they are not contributing anything in additional production
• Their marginal productivity is zero

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