unemployment

Unemployment refers to the share of the labor force that is without work but actively seeking employment and available to work. It excludes those who are not seeking work or who are no longer available, depending on the measurement. The unemployment rate is the proportion of unemployed people among the labor force, usually expressed as a percentage. Labor force participation and the size of the inactive population influence these measures.

Unemployment is typically categorized into frictional, structural, and cyclical types. Frictional unemployment arises from normal turnover and the time it takes for workers to find new jobs. Structural unemployment results from long-term shifts in the economy that change the mix of available jobs or the skills workers possess. Cyclical unemployment follows broader economic downturns when demand for goods and services falls. Seasonal unemployment occurs in industries with regular seasonal patterns.

Causes include business cycle fluctuations, changes in technology, globalization, and policy settings that affect hiring and training. Long durations without work can reduce skills, earnings, and labor market prospects, while high unemployment can dampen consumer demand and create social and political tensions.

Policy responses aim to reduce unemployment and its duration. They include macroeconomic stabilization (fiscal and monetary policy), active labor market programs (job search assistance, retraining, wage subsidies), and social safety nets such as unemployment benefits. Structural reforms may improve the matching of workers to jobs, while programs to expand regional employment or targeted investments can offset localized downturns.

Data on unemployment come from labor force surveys conducted by statistical agencies. The unemployment rate varies across countries and demographic groups and is often higher among youth and long-term job seekers. Notable historical episodes, such as major recessions, illustrate the sensitivity of unemployment to economic cycles.