Vadodara Institute Of Engineering

Name: Chaturvedi Anupam(501)Subject: Engineering Economics And

ManagementTopic : Unemployment and Its Types

Teacher : Miss. Kinjal PatelDivision : Mechanical 3

Semester : 4th

Unemployment:

•Unemployment is the inability of labor-force participants to find jobs.

•As the labor force grows, making sure that all participants are fully employed becomes a critical issue.

Rate of Unemployment:

• The average rate of unemployment around which the economy fluctuates is called the natural rate of unemployment.

• The natural rate is the rate of unemployment toward which the economy gravitates in the long run.

Unemployment Rate:

• The unemployment rate is the proportion of the labor force that is unemployed. To calculate the rate, you need to know the number of people unemployed and the number of people in the labor force.

• Unemployment rate = number of unemployed people / labor force

• 8,800,000 unemployed / 147,000,000 civilian labor force = 6.0% unemployment rate.

Reasons for Unemployment

•There are many reasons for unemployment:

• A person may be just entering the labor force• A person was laid off from full employment• A person could quit full time employment or be fired

•Some people are no longer counted as being unemployed. They are called discouraged workers. They are considered people who are not actively seeking employment but would look for or accept a job if one was available.

•Other employment problems include those individuals who are either working part-time and seeking full-time employment, or are employed at jobs below their capacity.

•People in this situation are called underemployed.

•Examples of underemployment include a college graduate with a Bachelor’s degree in business working as a cook at a fast food restaurant, and a teacher who is unable to find a full-time job working as a substitute teacher.

•Underemployed people are counted as being employed and not included in the unemployment rate.

Seasonal Unemployment:

•Seasonal unemployment is unemployment due to seasonal changes in employment or labor supply.

•Examples include students employed during the summer at Mackinaw Island in northern Michigan, employment in the construction industry, and people employed at Cedar Point Amusement Park in Ohio.

Frictional Unemployment

• The unemployment caused by the time it takes workers to search for a job is called frictional unemployment.

• Examples of frictionally unemployed people include new college graduates and people quitting a job and looking for something different or better

Phantom Unemployment:

•Another employment problem occurs when people indicate that they are actively seeking employment but are not really interested in finding a job.

•These people are called the phantom unemployed.

•The phantom unemployed are counted as part of the unemployment rate even though they are not really interested in working.

Structural Unemployment:

•Structural unemployment is unemployment caused by a mismatch between the skills or location of job seekers and the requirements or location of available jobs.

•Jobs may be available in other geographic areas or for individuals with specific skills and abilities.

•Examples include laid off steelworkers in the 1980s and defense contractors in the 1990s. Also teenagers and others with a lack of job skills are included.

Cyclical Unemployment

•Cyclical unemployment is unemployment caused by a lack of job vacancies; an inadequate level of aggregate demand.

•Cyclical unemployment commonly occurs during recessions. Companies cut back on workers due to reduced sales, fears of an economic recession, and insufficient consumer demand.