Question

Define or explain the concepts.

1. Unemployment

2. Underemployment

3. Urban unemployment

4. Disguised unemployment

5. Frictional unemployment

6. Structural unemployment

Answer 1

1. Unemployment refers to the situation where an individual is able and willing to work at an existing wage rate but does not finds any work. Here, the words “able” and “willing” are significant. Suppose a person can work, but does not voluntarily work for some reason then he will not be regarded as unemployed because the person is not willing to work despite being able to do so.

2. Underemployment implies a situation wherein individuals are less than fully employed. To put in other words, in underemployment, the person works for a lesser duration of time than what he actually can. In this sense, we say that the person remains unemployed for some hours every day, or for some months of the year. According to the data given by the National Sample Survey, “extreme underemployment” refers to the situation wherein a person works for 28 hours a week, while “limited underemployment” refers to the situation wherein a person works for 20–42 hours a week.

3. Urban employment is the one which is found in cities and towns. In other words, unemployment found in urban areas is known as urban unemployment. It is categorized into three main types, i.e technological unemployment (caused due to ever-changing and improving technology), frictional unemployment (caused due to imperfections in the mobility of labour) and educated unemployment (caused due to low quality education system).

4. Disguised unemployment is a situation where too many people are employed in an activity, such that removal of a few of them does not affects the total productivity. In such situations the marginal productivity of labour is zero. It is a common problem in underdeveloped and developing countries like India. For instance, an entire family (or even, an extended family) working on a single farm is a common sight in rural India. Even if some of the family members were to be removed from the farm, the agricultural output would not be affected. This suggests that extra people are disguisedly employed on the farm.

5. Frictional unemployment occurs due to imperfections in the mobility of labour. Sometimes it happens that a person wishes to change his job. However, in the process of searching for a new job, he may remain temporarily unemployed. Similarly, a person might wish to remain voluntarily unemployed for some time. For example, a female worker might take a sabbatical for a few weeks or months on account of her marriage, maternity, etc. This is called frictional unemployment. It is sometimes also called search unemployment.

6. Structural unemployment refers to the situation in which individuals are unable to find jobs due to structural changes that take place in the economy. These changes are in the form of introduction of new technology, change in demand pattern and such others.