Effects Of Unemployment On The Economy
Unemployment is defined as the state of being unemployed. When an individual is actively searching for work but is unable to find a job they are considered unemployed. The unemployment rate has an effect on the overall US economy. The unemployment rate is usually a good measure of how healthy the economy is. That is if its low the economy is doing well with jobs, if the unemployment rate is high generally the economy isn’t doing so hot. The unemployment rate is measured by the number of unemployed people divided by the total number of people in the labor force.
There are a lot of different variations when considering the unemployment rate and who is considered an unemployed person and who is considered a part of the work force. For example, the US Bureau of …show more content…
Various ideas different among the definition of unemployment between economists. Keynesian economics believe that there is a natural rate of unemployment because the skills of people and the positions available don’t always match up. In addition, Neoclassical economics believe that the labor market is efficient if it is always left alone, but laws like minimum wage and unions take the balance and through it off, making jobs unavailable for some people causing unemployment.
In addition, to different variations about the unemployment rate, there are also three different types of unemployment. They are structural, frictional and cyclical unemployment. Structural unemployment depends primarily on the needs of the economy and the changes the economy is undergoing. It is associated with the people with mismatch of jobs and people due to the lack of skills or they are in the wrong area of work. For example, when there are new machines to help make cars or in other words advancement in technology, people get laid off because now these machines can assemble the cars. Basically its people who find themselves in a situation which they need to acquire new skills to get