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Table of Contents

  1. Topic pack - Macroeconomics - introduction
  2. 2.1 The level of overall economic activity (notes)
  3. 2.1 The level of overall economic activity (questions)
  4. Section 2.2 Aggregate demand and supply (notes)
  5. Section 2.2 Aggregate demand and supply (simulations and activities)
  6. 2.2 Aggregate Demand and Aggregate Supply (questions)
  7. 2.3 Macroeconomic objectives (notes)
  8. Low Unemployment
    1. Low Unemployment
    2. What the data says
    3. The meaning of unemployment
    4. Case study - regional variation
    5. Consequences of unemployment
    6. Case study - tougher for men
    7. Types and causes of unemployment
    8. Disequilibrium unemployment
    9. Equilibrium unemployment
    10. Policies to reduce unemployment
    11. Low and stable inflation
    12. Low and stable inflation (notes)
    13. The meaning and measurement of inflation
    14. A consumer price index
    15. Finding out more about consumer price index weights
    16. Problems with measuring inflation
    17. Inflation - videos
    18. Consequences of inflation
    19. Hyperinflation
    20. The consequences of deflation
    21. Types and causes of inflation: demand-pull inflation
    22. Types and causes of inflation: cost-push inflation
    23. Case Study - car prices in Trinidad
    24. Possible relationships between unemployment and inflation
    25. PlotIT - Phillips curve
    26. Phillips curve - long-run
    27. Natural rate of unemployment
    28. NAIRU
    29. Economic growth
    30. Economic growth (notes)
    31. Causes of economic growth
    32. Economic growth and the PPF (1)
    33. Economic growth and the PPF (2)
    34. Economic growth and the business cycle
    35. Economic growth and the aggregate supply curve
    36. Consequences of economic growth
    37. Equity in the distribution of income
    38. Equity in the distribution of income (notes)
    39. Indicators of income equity
    40. Poverty
    41. The poverty line: An Indicator of Relative poverty
    42. The causes of poverty
    43. The role of taxation in promoting equity
    44. The role of taxation in promoting equity (notes)
    45. Other methods of promoting equity
  9. 2.3 Macroeconomic objectives (questions)
  10. 2.4 Fiscal policy (notes)
  11. 2.4 Fiscal policy (questions)
  12. 2.5 Monetary policy (notes)
  13. 2.5 Monetary Policy (questions)
  14. Section 2.6 Supply-side policies (notes)
  15. 2.6 Supply-side policies (questions)
  16. Print View

Syllabus: The meaning of unemployment

Syllabus: Define the term unemployment.

Remember full employment does not mean 100% employment ie does not mean that everyone is employed (see Page 52). It means the number of people willing and able to work at a given wage rate is equal to the number of employees, firms are willingto hire at that wage rate. If there are still people who want to work at the existing wage rate, and are willing and available to work, this is described as unemployment (You can also view this as excess supply of labour)


Unemployment is where individuals are willing and able to work at a given wage rate, but do not have a job.

Employment rate

The employment rate is the percentage of the labour force who have a job. The Labour Force is everyone who wants a job at the going wage rate and is eligible for work (ie not children, very old, infirm, in prison etc see below)

 To calculate the employment rate you need         Total employed       X 100
                                                                    Total Labour Force

Unemployment rate

Syllabus: Explain how the unemployment rate is calculated.

Syllabus:Calculate the unemployment rate from a set of data. 

The unemployment rate is the percentage of the labour force who do not have a job. To calculate the unemployment rate you need             Total Unemployed   X 100
                                                    Total Labour Force


Underemployment refers to those people, who can only find part-time employment, although they want full-time employment.

Syllabus: Explain the difficulties in measuring unemployment, including

  • the existence of hidden unemployment,
  • the existence of underemployment,

and the fact that it is an average and therefore ignores
regional, ethnic, age and gender disparities

The official definition of unemployment may differ from country to country. National definitions vary as regards age limits, reference periods, the criteria for seeking work, treatment of persons temporarily laid off and of persons seeking work for the first time. The International Labour Organisation (ILO) definition is commonly employed.

In addition, countries will often distinguish between those who are classified as unemployed, and those who claim some form of unemployment-related benefits because they have no job; the latter being referred to as the claimant count.

An explanation of this difference with reference to the UK can be found on the UK government website.

Hidden Unemployment

Hidden unemployment is the unemployment, or underemployment of workers, that is not reflected in official unemployment statistics, because of the way the statistics are compiled. Only those who have no work, but are actively looking for work, are counted as unemployed. Those who have given up looking, those who are working less than they would like, and those who work at jobs in which their skills are underutilized are not officially counted among the unemployed, though in a sense they are. These groups constitute hidden unemployment.


Getting a full picture of the rate of unemployment is difficult (see page 80 for more on this). In addition to the problems of underemployment and other examples of hidden unemployment, a single national unemployment rate does not take into account any regional, ethnic, age and gender disparities. All of these may be of importance to the government when considering policy measures.