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Prayag Rupji

SMBA 11Roll No 12

Faculty : Dr G K Kalkoti

8/7/2019 PrayagSMBA11-Roll No 12 - Unemployment

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Index1. What is Unemployment?

2. What is Labour Force and Unemployment Rate.

3. Types of Unemployment.4. Relation between Rate of unemployment and Rate of 

Inflation - Philip Curve.

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�

Unemployment occurs when aPh

ysically Fit ,Mentally sound, Well qualified person isavailable  and willing  to workat prevailing wagerate but currently without  Job.

� Unemployment refers to the inability for willingworkers to find gainful employment.

� people who do not have a job, have actively lookedfor work in the past four weeks, and are currently available for work. Also, people who were

temporarily laid off and are waiting to be calledback to that job are counted as unemployed.

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Unemployment Rate% of LABOUR FORCE without jobs & actively seeking jobs

Labour Forced :

1. Age group between 15 602. Physically Fit3. Mentally Sound4. Well Educated.5. Willing to work at prevailing wages

Labour Force does not include Who  do not want to work

Unemployment Rate = No. of people Unemployed  x 100Labour Force

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Unemployment RateEg.

Total Labour Force  = 50 Cr

Employed = 45 CrUnemployed = 5

Unemployment Rate = No. of people Unemployed  x 100Labour Force

= 5    x 100 = 10%50

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Unemployment

V oluntary Involuntary(Forced)

1. Seasonal2. Structural3. Cyclical4. Technological5. Disguised / Hidden

6. Underemployment

1. Frictional

(P

erson is able to find job but not willingto work due to some reason.unemployment is attributed to theindividual's decisions)

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Seasonal Unemploymenty caused by recurring changes (weather or holiday)

y Expected at a given time of year

Eg.Industries such as construction that are affected by theweather.

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Structural Unemploymenty Unemployment caused not by lack of demand, but

by changes in demand patterns or obsolescence of 

technology, and requiring retraining of workersand large investment in new capital equipment .

y Caused by mismatch of skills of the unemployed &the skills needed for jobs

Eg.  Manual Testing

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Cyclical Unemploymenty caused by the lack of jobs during a recession

Hypothetical Business Cycle

Peak

Peak

Trough

Recession Recovery 

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Technological Unemploymenty Unemployment caused by the replacement of 

workers by machines or artificial intelligence

technology.

Eg. Robot

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Disguised / Hidden

Unemploymenty More people working for smaller work without

increase in revenue.

y Overqualified.

y Part Time worker

Underemployment

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Frictional Unemploymenty Frictional unemployment occurs when a worker moves

from one job to another. While he searches for a job he isexperiencing frictional unemployment. This applies forfresh graduates looking for employment as well.

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Inflation and the rate of Unemployment

y THEPHILLIPS CUR V E :

Inverse correlation betweenInflation andUnemployment. Whenunemployment is high,

inflation is low and wheninflation is high,unemployment is low