willing to work but not presently working. The "unemployed"
comprise all persons above a specified age who during the reference period
"without work", i.e. that hadn't a paid employment or a self-employment;
In an enlarged meaning,
under-employment is the emergence of the group of people 1. working
less hours and days than desired, 2. working with labour contracts different
from desired ones, 3. working in places where their competences are not
full employed or 4. whose productivity is lower than it would be on another
Economic losses from unemployment are large, since they relate to all goods and services that could be produced by the unemployed, to income losses for the unemployed household, to consumption and employment losses caused by reduced demand of the latter, to a wide range of social pathologies and health diseases.
In terms of cumulated
stocks, during unemployment a depletion of human capital takes place.
Moreover, economic return to education is reduced, thus education efforts
Unemployment is often an element of a vicious circle with poverty, low education and human capital, health disease, social and political marginality. Moreover, the same risk of remaining unemployed is a reduction in utility and welfare for the actual employees.
Unemployment is usually segmented according to the following characteristics of the unemployed:
In particular, developing
this last point, unemployment can be partitioned according the preceding
work experience of the unemployed. Thus, we distinguish:
On a collective level,
one usually distinguishes:
general terms, unemployment depend on the compared dynamics of labour
demand and population (in particular, active population, i.e. the
people willing to work in percentage on the total population in a certain
reduction in GDP means that employees are redundant and, depending
on institutional arrangements, a dismissal tide will take place. This,
in turn, may depress consumption, leading to a
further reduction in GDP ("Keynesian multiplier").
strategies of downsizing and outsourcing abroad
and the conscious decision of weaken labour strength may lead to an increased
reason of dismissal wave will have an immediate impact on unemployment,
unless the involved persons totally renounce to seek a new job, passing
directly from employment to non-active population, without an unemployment
phase. In a longer time horizon, unemployment will
be reduced if the persons earlier involved in dismissal find new jobs.
Lack of labour market transparency (e.g. highly inefficient public employment agencies) may lead to losses in job opportunities. Lack of support to labour mobility and effective job-seeking strategies and procedures contribute to local unemployment. Low hourly wage and high transport time and cost coalesce to reduce intra-regional mobility. Lack of education in languages and personal networks hinder inter-regional labour mobility, which encounters also institutional, legal, and social barriers.
A large unemployment may brake wage dynamics.
Still, labour market is often split with a sharp separation between firms
internal and external markets, so that their dynamics and relationships
turn out to be not automatic.
is clearly dependent on actual and forecasted unemployment.
of groups, as women, young and minorities, heavily depends on unemployment
structure. Selection criteria at job interviews
may lead to discrimination and vicious circles.
Depression, apathy, lack of self-confidence are common individual effects of unemployment. Helping them to find again the motivation to search and keep a job and to take off their own life trajectory is one of the difficult tasks of labour supporting agencies.
The willingness of voters to confirm the current government can be influenced by the labour market conditions. In particular, a rising unemployment can make the voters less likely to support it, with growing anger and anxiety. Asymmetrically, people losing jobs charge the goverment, people finding a job praise themselves.
In partisan terms, usually a (Keynesian) political left becomes more popular during such period. However, depending on who is governing and what are the positions of the opposition, also a left-leaning government can be thrown out of office when unemployment is rising and the political right claims to be more business-friendly and capable of putting the economic system back in order.
Unemployment is far from zero in most countries for most of the
time. Some countries have experienced stable high level of unemployment
rate with GDP growth clearly ineffective in reducing it.
By contrast, full
employment is possible and historically well documented, usually after
a clear policy commitment.
If labour use is not too flexible, unemployment may be lagging behind the cycle, with a reduction of unemployment only after a period of trustworthy recovery and dismissal tide well after the high GDP peak, if at all. In this case, temporary slow-down may be overwhelmed without unemployment increase.