1' Labour Force

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1. Labour Force
Unemployment

• It refers to the land-based non-institutional
  population aged 15 and over who belongs to either
  the employed population or the unemployed
  population.

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2. Employed population

• It refers to persons who aged 15 and over who
• have been at work for pay or profit during the
  seven days before enumeration or
• who have had formal job attachment

3
Unemployed population

• It refers to persons aged 15 and over who
• have not had a job and have not performed any
  work for pay or profit during seven days before
  enumerations and
• have been available for work during the seven
  days before enumeration and
• have sought work during the thirty days before
  enumeration

4
Underemployed population

• It refers to those employed persons who
• have involuntarily worked less than 35 hours
  during the seven days before enumeration and
• have sought additional work during the thirty
  days before enumeration or
• have not sought but have been available for
  additional work during days before enumeration.

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Unemployment rate

• It refers to the percentage of unemployed persons
  in the labour force.
• Unemployment Rate
• Unemployment population 100
• Labour force

6
Underemployment rate

• It refers to the percentage of underemployed
  persons in the labour force.
• Underemployment Rate
• Underemployment population 100
• Labour force

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Voluntary unemployment
The classical view of unemployment

• It is the unemployment that job-seekers are
• not willing to accept jobs at the existing
  market wage rate though vacancies are available..

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Involuntary unemployment

• It is the unemployment that job-seekers are
• willing to accept jobs at the existing market
  wage rate but vacancies are not available..

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Frictional Unemployment
Types and causes of unemployment

• It is the unemployment resulted from the normal
  turnover of workers who as job-seekers have to
  spend time on job search due to imperfect
  information.

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Structural unemployment

• It is the unemployment resulted from the
  mis-match between the unemployed and vacancies
  brought by structural changes of an economy.

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Deficient-Demand Unemployment

• It is the unemployment resulted from the fall
  in the aggregate demand under rigid prices.

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Cost of unemployment

• Loss of output
• Loss of skill and experience
• Living standard is lowered
• Family and social problem
• Financial burden to the society

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Phillips Curve

• It is a line showing the relationship between
  unemployment rate (plotted on the x-axis) and
  inflation rate (plotted on the y-axis).

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Short Run Phillips Curve
Inflation Rate
Fall in inflation rate is constant
Unemployment rate is increasing
SR Phillips Curve
SR Phillips Curve
0
Unemployment Rate
15
Long Run Phillips Curve
Inflation Rate
20
LR Phillips Curve
10
SR Phillips Curve
0
Unemployment Rate