Workers who are of working age and are actively seeking employment but unable to find a job

Underemployment: Workers being employed in jobs that do not fully untilise their skills, or workers having to work part time but want to get a full time job but they cant.

Unemployment rate: No of unemplloeyed/ labor force * 100

Limitations in measuring unemployment

• Institutional differences: every country has own ways to measure> information gathered from surveys, national census, administrative records> inaccuracies> inconsistency in definitions of unemployment.
• Exclude discouraged workers> stopped looking for work> but are unable> overstates health of economy
• Underemployment: high skilled workers in low skilled jobs> but bettwer than no job
• No distinction between part time full time> these would like to be full time but > earning less but better than no income
• Includes people employed in the hidden economy> officially listed unemployed but are employed> understates the health of economy
• No insight on extent of unemployemtn faced by different demgraphics based on ethnicity, gender> only gives an average for a country> makss inequalities aamong different groups

Consequences

Economic consequences

• Loss of read output> below PPC> below full employment level
• Loss of income> low average income> gdp low> standard of living low
• Unemployment benefits increase> income tax revenues fall> budget worsents> cut spending on merit good> opportunity cost
• Unequal distribution of income

Personal/ social Consequences