After studying this topic, you should be able to understand
- The labour force consists of both the employed and the unemployed.
- The unemployment pool is formed by the unemployed persons at any point of time.
- The natural rate of unemployment is the average rate of unemployment around which any economy fluctuates in the long run.
- Frictional unemployment arises due to the time gap it takes for the workers to search for a job that best suits their individual skills and tastes, when the economy is at full employment.
- Wait unemployment is caused by wage rigidity above the equilibrium level of employment.
- Unemployment results in a loss in production and also leads to an undesirable effect on the distribution of income.
- The Phillips’ ...