Unemployment

Unemployment is one of the big problems in economics. Unemployment is defined as the proportion of the labor force of working age (between 16 and 64) who have no jobs.

The labor force consists of people employed and unemployed. People who do not want to work or can not work does not belong to the labor force. Unemployment is a problem because it causes loss of production, leads to destroyed human capital and it provides social and health problems. It is customary to divide the unemployment rate in various types. Cyclical unemployment is temporary and due to a general downturn in the economy. Frictional unemployment is unemployment that occurs because employees changes jobs and is only temporary. Seasonal unemployment is also temporary and is due to production is seasonally sensitive industries.

Structural unemployment is the most serious form of unemployment and that is because the structure of the society is wrong. Structural unemployment can be that there is a mismatch between labor demand and labor supply. Matching shortage may be due to a skills gap or a geographical gap.