Theme 13. Unemployment and inflation are both manifestations of economic instability

13.1 Essence and basic forms of unemployment

Unemployment - a condition in which the willing cannot find work at the regular rate of wages.

Unemployment rate - the percentage of the unemployed to the labor force, which does not include: students, pensioners, prisoners, and boys and girls up to 16 years.

The overall unemployment rate - the percentage of the unemployed to the total labor force, including those engaged in active military service.

The following types of unemployment.

Frictional unemployment - unemployment associated with short period required to search for a new job in connection with education, output from maternity leave, relocation. If a person is given the freedom of choice of occupation and place of work, at any given time, some workers are in a position "between jobs." Some voluntarily change jobs. Others are looking for a new job because of layoffs. Others temporarily lose seasonal work (for example, in the construction industry due to bad weather or in the automotive industry due to changes in patterns). And there is a category of workers, especially young people, who are looking for work for the first time.

Structural unemployment - unemployment associated with the period of job search those employees whose specialty or qualification does not allow them to find the right job. Structural unemployment occurs when you move production from one region to another, the decline of old industries and the emergence of new ones. Because of these changes in the demand for certain types of jobs is reduced or stopped altogether.

The most recent form of a reduction of employment is technological unemployment associated with the introduction of poorly populated and deserted technologies based on electronics.

Cyclic unemployment - unemployment is associated with the inability to find a job in any field due to the overall low aggregate demand for labor. While reducing the total cost of production and increasing unemployment almost everywhere. Cyclical unemployment is determined by the difference between the unemployment rate at the moment and the natural rate of unemployment.

Hidden unemployment covered by the main part of rural residents, and also ruins the small producers and traders. Such provisions are found working as an increased need for workers to quickly replenish by this segment of society. These populations are especially numerous in the developing world.

Employment rate - the percentage of the adult population employed that are not on welfare, in shelters, nursing homes, etc.

Full employment does not mean complete absence of unemployment. Economists consider frictional and structural unemployment is quite inevitable: hence the "full employment" is defined as the employment of less than 100% of the labor force.

Full time vacancy rate is maintained at 5.5 -6.5% of the total labor force. This figure may vary from country to country.

The unemployment rate at full employment is also called the natural rate of unemployment. The concept of the natural unemployment rate was introduced in economics M. Friedman in 1968 and developed independently by other American scientists - E. Phelps.

Natural rate of unemployment - - a set of frictional and structural unemployment and the unemployment rate is associated with a stable economy, when the real national product is at the natural rate and the expected inflation rate is equal to the actual level of inflation.

From the perspective of neoclassical theory possible to eliminate unemployment actually denied. Moreover, part-time employments by many economists have recognized the need to ensure the flexibility of the economy.

The unemployment rate is characterized by a norm, which is calculated as the ratio of the total number of unemployed to the labor force as a percentage.

Unemployment rate = Number of unemployed х 100
Workforce

Unemployment has economic and social consequences:
1. GNP is lagging compared to the amount that society would have at their potential.
2. Is an uneven distribution of the costs of unemployment among different social groups.
3. Lost skilled workers.