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What is unemployment?

It is the part of the labour force which is available for work at current wage rate but don’t have work. It can be expressed as a number or as a percentage of labour force.
Labour force: Part of the whole population which is willing and able to work.

How to calculate Unemployment rate?

Number of unemployed/Labour force X 100

Unemployment rate in different regions

Cost of Inflation

Cost for people in work

  1. Fall in income will result in a fall in the standard of living for the unemployed.
  2. The longer the people are unemployed, the more dispirited they may become. It leads to stress and loss of self-esteem for the unemployed.

Cost for the economy

    1. The opportunity cost of so many workers unemployed is the goods and services they could have produced. The total output of the economy will fall and people will have fewer goods and services.
    2. Unemployment benefits have to be borne by the tax payers. Higher taxes have to be paid to cover the unemployment benefits.
    3. The opportunity cost of using the public money for unemployment benefits. That money could have been used for something more productive.
    4. Unemployment leads to fall in income which in turn results in a fall in aggregate demand in the economy.
    5. Social cost of unemployment is a rise in crime and vandalism.

 

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