Unemployment

By Amna Khalid
 Definitions
• Unemployed
• Unemployment
• Underemployment
 The Labor Force
• The Labor Force is defined as:
– The total number of people employed or actively
seeking employment.
– It is calculated By:

• Number Employed + Number Unemployed

(but are looking for work)
 Who do we count as being in the
labor force?
• Who is not counted? • Who is counted as
– Workers who are under working:
16. – Those who are working
– Volunteer Workers full-time for pay.
– People who are in prison – Part-time workers
– People who are in – Self-Employed workers
hospitals – Family workers who
– Full-Time Students work at least 15hrs a
– Retirees week at a family
enterprise. (paid or
unpaid)
Calculating Unemployment Rate
• The Unemployment Rate
is what you always hear
given on the news: Its
calculated by:
Number Unemployed
* 100
Labor Force

Final Equation

# Unemployed

# Employed + # Unemployed
 Economic and Social Impacts of
Unemployment:
• Okun’s Law:
For every 1% increase in
unemployment rate GDP falls by 2%....

• Economic and Social Impacts of Unemployment:

When unemployment increases goods and

services produced in a country decreases and
it adversely affects the economy.
 3 Types of Unemployment
• Cyclical Unemployment ( Attempt to Correct)
• Frictional Unemployment (Cannot Correct)
• Structural Unemployment (Cannot Correct)
 Cyclical Unemployment

• Cyclical Unemployment is defined as:

– The increase in unemployment that
occurs as the economy goes into a
slowdown or recession.
– This is the one that is preventable & the
Government tries to fight it as much as possible.
 Frictional Unemployment

• Frictional Unemployment:
–Unemployment associated with
people moving from one job to
another or moving into the
labor force.
 Structural Unemployment
• Structural Unemployment:
– Long term unemployment that results from
structural factors in the economy, such as a
mismatch between the skills required by newly
created jobs and the skills possessed by those who
have lost their jobs in declining industries.
 Unemployment in Pakistan
• Labor Force:
50.5 million
Country comparison to the World: 11

• Unemployment Rate:
2011: 6.2%
Conclusion