Unemployment refers to the number of people in the labor force who are actively seeking work but are unable to find it. The labor force includes all people who are able and willing to work, including those who are employed and those who are unemployed.
There are several types of unemployment, including:
- Frictional unemployment: Frictional unemployment occurs when people are temporarily out of work while they are searching for a new job. This type of unemployment is normal and occurs as people move in and out of the labor force.
- Structural unemployment: Structural unemployment occurs when there is a mismatch between the skills and abilities of the labor force and the needs of employers. This can be caused by technological change, globalization, or changes in the demand for certain goods or services.
- Cyclical unemployment: Cyclical unemployment occurs when there is a decline in economic activity, such as during a recession. This type of unemployment is caused by a reduction in demand for goods and services, which leads to a decline in employment.
- Seasonal unemployment: Seasonal unemployment occurs when people are out of work during certain seasons of the year due to changes in demand for goods and services. For example, ski instructors may be out of work during the summer months.
The unemployment rate is the percentage of the labor force that is unemployed. It is calculated by dividing the number of unemployed people by the total number of people in the labor force (employed and unemployed), and multiplying by 100.