GROUP 1

ALOM
MANOJ RAIKAR
MANSOOR
SIBA SANKAR PATI
KARTHIK
• Types of unemployment
• Causes of unemployment
• Cost of unemployment
• Unemployment rate
• Theories of unemployment
• Impact of unemployment
• Benefit of unemployment
 Definition

Unemployment is defined as
when people are without jobs
and they have actively looked
for work within the past four
weeks.
TYPES OF

• Seasonal unemployment
• Frictional unemployment
• Structural unemployment
• Cyclical unemployment
• Classical unemployment
Causes of unemployment

• Technological advancement
• Population
• Worldwide financial crisis
• Increase in petroleum prices
• Undulating business cycles
• Skill gap
• Shortage of natural
resources
Cost of unemployment
• Cost of unemployment is more
than the loss of income and status
suffered by the individual who is
not working

• Unemployed workers produce no

output

• This loss of output is measured by

GDP gap

• GDP gap= potential real GDP-

actual real GDP
•Natural rate of unemployment
• Unemployment rate is the percentage of the
labor force that is not working

• Unemployment rate =number unemployed/number

in labor force
 Calculation of
unemployment rate
• With labor force (LF) comprising of all unemployed (U) and employed (E)
people, that is,

• LF = U + E

• we have unemployment rate or UR, expressed as

• UR = U / LF * 100%

• In a case of 100,000 people in the labor force and 10,000 of whom are
unemployed (lost jobs and actively seeking one), the unemployment rate would
be calculated as

• UR = U / LF * 100% = 10,000 / 100,000 * 100% = 10%

 Theories of Unemployment
• Okun’s law

• Phillips curve

• Classical view
 Okuns law
• Okun's law is an empirically observed
relationship relating unemployment to losses
in a country's production. It states that for
every 1% increase in the unemployment rate,
a country's GDP will be an additional roughly
2% lower than its potential GDP
 Phillips Curve
The Phillips curve is a historical inverse relationship
between the rate of unemployment and the rate
of inflation in an economy. Stated simply, the lower the
unemployment in an economy, the higher the rate
of inflation
 Classical View
• Full employment exists “when everybody who at the running rate
of wages wishes to be employed”. Those who are not prepared to
work at the existing wage rate are not unemployed in the Pigovian
sense because they are voluntarily unemployed.
 IMPACT OF
UNEMPLOYMENT

• Reduction in output

• Reduction In Tax Revenue

• Rise In The Government Expenditure

 BENEFITS OF UNEMPLOYMENT

•Payments to ex-military personnel and employees of

federal/government agencies in case of certain situations.

•Unemployment insurance.

•Additional income for unemployed individuals with children

or any other dependants
 Schemes for unemployment
• Employment Assurance Scheme (EAS)
• National Rural Employment Guarantee Act (NREGA)
• Rural Employment Generation Program (REGP)
• Sampoorna Grameen Rozgar Yojana (SGRY)
• Jawahar Rozgar Yojana
• Training of Rural Youth for Self-Employment
(TRYSEM)
• Swarnjayanti Gram Swarozgar Yojana (SGSY)
• Support to Training and Employment Program for
Women (STEP)
India’s unemployment rate since 2000

Year %
2000 9.2
2001 9.2
2002 10.5
2003 10.4
2004 9.5
2005 9.2
2006 8.9
2007 7.8
2008 7.2
2009 7.8
2010 10.7
Global Trends-Unemployment rate
year egypt china japan u.s
2003 12% na 5.4% 6.0%
2004 9.9% 10.10% 5.3% 5.5%
2005 10.9% 9.8% 4.7% 5.1%
2006 9.5% 9.0% 4.4% 4.6%
2007 10.3% 4.2% 4.1% 4.6%
2008 9.10% 4.0% 3.8% 5.8%
2009 8.4% 4.0% 4.0% 7.2%

2010 9.4% 4.30% 5.1% 5.7%