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
Cost of Inflation
Cost for people in work
Cost for the economy
- 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.
- Unemployment benefits have to be borne by the tax payers. Higher taxes have to be paid to cover the unemployment benefits.
- The opportunity cost of using the public money for unemployment benefits. That money could have been used for something more productive.
- Unemployment leads to fall in income which in turn results in a fall in aggregate demand in the economy.
- Social cost of unemployment is a rise in crime and vandalism.
