Unemployment
Definition
Unemployment refers to the state of being without a job, actively seeking employment, and available to work. It is an important economic indicator that measures the percentage of the labor force that is jobless.
Analogy
Think of unemployment as an empty seat in a game of musical chairs. When there are more players than chairs, someone will be left without a seat - just like when there are more job seekers than available jobs, some people will be unemployed.
Related terms
Labor Force Participation Rate: The labor force participation rate measures the percentage of working-age individuals who are either employed or actively looking for work.
Frictional Unemployment: Frictional unemployment refers to temporary unemployment that occurs when individuals are transitioning between jobs or entering the workforce for the first time.
Structural Unemployment: Structural unemployment happens when there is a mismatch between the skills and qualifications workers possess and those demanded by employers due to changes in technology or industry shifts.
"Unemployment" appears in:
Subjects (2)
Additional resources (1)
Practice Questions (6)
- Which phase of the business cycle is characterized by low unemployment and rising inflation?
- How does a decreasing SRAS impact real GDP, unemployment, and price levels?
- In the long run, what happens to output and unemployment when there is a shift in the aggregate demand (AD) curve?
- When unemployment is high, inflation tends to be:
- In the long run, is there a trade-off between inflation and unemployment?
- What happens to inflation and unemployment when there is an increase in aggregate demand (AD)?
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