The meaning of unemployment and its economic effects to the society?

Answer 1

Unemployment refers to people who want to work but can not find a job. The society loses the production that would have been provided by the unemployed workers. If a large percent of the population is unemployed it can cause social unrest.

Answer 2

Unemployment was kind of a mystery for economists for a long time. Taken at its basics, it represents unused resources. Basic economic models have trouble with those.

An unemployed person is like an unused building or disconnected machine. It can do things of value, so why hasn't someone come along and got it working?

The best we can do is this:

There are three types of unemployment, frictional, structural, and cyclical.

Frictional unemployment represents people who are looking for a job that is out there somewhere, but the person hasn't found it yet. There is a match waiting to happen.

Structural unemployment is made up of people who need a job, but are not qualified for the jobs out there. There are jobs, and people, but they don't match.

Cyclical unemployment is related to the business cycle (recessions, expansions, etc). High unemployment in recessions is the product of cyclical unemployment.

Of these, frictional and structural make up the "natural rate of unemployment" They are a product of a growing economy. Without some of that, our economy couldn't change and grow as technology advances. Autoworkers are replaced by robots, but are not trained to be programmers. Sucks for them, but necessary for a continually growing economy.

Cyclical unemployment can be controled or ameilorated by evening out the business cycle. We've done a pretty great job of that.

Another interpretation of all the above argues that there is a natural rate of unemployment unrealted to jobs changing etc. People who don't like to work will quit if life without a job is good enough. The better life you can have without a job, the more people will skip having one. That is used to explain why American rates of unemployment in our worst time would be an incredibly strong job market for most European economies. Its easier to live without a job there.