4.5.1 Meaning of unemployment
Definition: Unemployment is when people of working age who are willing and able to work and actively seeking a job are without one. They are part of the labour force (economically active population). Full-time students, retired people and discouraged workers who have stopped searching are not counted. Unemployment rate = unemployed ÷ labour force × 100.
Example: India measures unemployment through the Periodic Labour Force Survey (PLFS); a large informal sector and disguised unemployment in agriculture make the true picture harder to see.
Analysis chain (AO2): Unemployment → output below potential (inside the PPC) → lost income and spending → lower AD → further job losses.
Evaluation (AO3):
- Underemployment (working fewer hours than wanted) is not captured by the headline rate.
🔒 Also in the full notes
- 4.5.2 Measures of unemployment and difficulties of measurement
- 4.5.3 Causes and types of unemployment
- 4.5.4 Consequences of unemployment
- Exam practice: 6 practice questions
- 3 exemplar answers with full model answers and mark breakdowns
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