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Unemployment - measurement, different types and the problems caused by unemployment

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Unemployment - Full employment is when all labor, people who are willing to work, is employed so the AS is vertical - Equilibrium unemployment occurs at the macro-economic equilibrium; when some people who are willing to work at the current wage are unemployed and do not have a job or are not working as much as they would like Unemployment, underemployment and disguised unemployment - Unemployment is when a person, who is willing to work at the current wage, has no work - Underemployment is when a person with a part-time job would like a full-time job but can't find one (this may be part-time during the day or seasonally during the year) - Disguised unemployment is when a person is paid and doesn't increase the GDP by working. o E.g. the person handing out free newspapers at Helsinki bus station Measuring unemployment - Unemployment is measured either as a number or as a percentage - The number is ...read more.


be more accurate as it may take into account the parallel market - Finland uses both measures; the Ministry of Labor counts those claiming unemployment benefit and the statistics of the counts by a statistical survey - Unemployment in Finland is higher when measured by the Ministry of Labor than when counted by the statistics office by several thousands Unemployment, why it is a problem - It is inefficient because scarce resources of labor are not being used - Labor that could be producing goods or services to meet our infinite wants is idle, and so AD is lower than necessary - Keynesian theory points out than unemployment causes negative externalities, crime, ill-health etc. - Other social problems at unemployment may include depression and other problems in society (e.g. poverty) - N.B. The social problems are only a result of unemployment if the unemployed are involuntarily unemployed. ...read more.


In Finland and the EU they rely on the social security (unemployment benefit) schemes. Keynesians believe they make up the majority of the unemployed Definitions of Unemployment - Seasonal unemployment is when someone is unemployed during a particular season of the year, e.g. a ski instructor in Lapland in summer or owner of a restaurant in the archipelago in winter - Structural unemployment is when someone is unemployed because their skills are no longer needed, e.g. paper-worker in Kemij´┐Żrvi or one of Saab's employees - Cyclical unemployment is the unemployment that increases during recession as AD shifts to they left, and (the cyclical unemployment) falls again during the recovery, e.g. construction workers, electricians and plumbers often fall into this category - Real wage or classical unemployment is unemployment that occurs because the wage is above the equilibrium (because of laws controlling minimum wages or trade unions). Monetarists view seasonal and structural unemployment as this (i.e. people are lazy and free riders) ...read more.

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