Unemployment

Discipline: Economics

Unemployment is a circumstance under which no jobs area available for some people who are able and willing to supply their labors. The percentage of such people to the number of labor force equals to the unemployment rate.

Unemployment is one of the most important indicators of an economy's health. Decreases in unemployment (or jobless claims) are highly favorable for the overall health of an economy.

Unemployment causes decreases in tax revenues, increases government expenditures (in terms of social security), decreases consumer spending and thus manufacturing output.

Unemployment can take many forms (such as voluntary, involuntary, frictional, structural or demand deficient) and it can be measured both as a stock and a flow.

Classical economists regard unemployment as a temporary phenomenon until price flexibility restored an economy to full employment. Later theorists, notably English economist John Maynard Keynes (1883-1946), challenged this view.

Also see: casual employment, cyclical unemployment, equilibrium theory, labor force

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