Economy

Disguised unemployment

ADVERTISEMENT

What is Disguised unemployment?

Disguised unemployment occurs when a part of the labor force is left without work, or is working in a redundant fashion so that worker output is basically zero. It is not unemployment that affects aggregate output. When productivity is low and workers are not filling enough jobs, it is called disguised unemployment.

 

KEY TAKEAWAYS

  • Disguised unemployment can be defined as unemployment that does little to affect the aggregate economic output.
  • It happens when productivity drops and there are too many workers who fill the jobs.
  • It can be used to refer to any segment of the population who is not employed at their full potential.

Understanding disguised unemployment

A lot of countries in developing nations have a high level of unemployment. This is because they have large labor forces. Low productivity can make it difficult to identify. This is often accompanied by informal labor marketplaces and agricultural labor market , which can absorb significant amounts of labor.

ADVERTISEMENT

 

Hidden, or concealed, unemployment is any population segment that isn’t working at its full capacity. However it is rarely included in official unemployment statistics. This includes those who are working below their abilities, those who have little productivity or anyone who isn’t looking for work, but is capable of performing work of value.

 

Another way to view disguised unemployment would be to say that people work but are not doing so in a highly efficient way. They may have skills that aren’t being used, or are working in jobs that don’t fit their qualifications (possibly due inefficiency on the market that doesn’t recognize them), or working less than they would prefer.

There are several types of disguised unemployment. They include those who have no skills but are working in sub-skilled jobs, people who are disabled or sick, and job seekers who become discouraged at their inability to find work.

Types of disguised unemployment

Underemployment

If they want to work full-time, people who work part-time may qualify for disguised unemployment. It can also include those who accept jobs that are below their skill level. Disguised unemployment can also be called “underemployment”, which refers to people who are working in a limited capacity but not at full capacity.

 

An example of this is a Master of Business Administration (MBA) who accepts a full time cashier job because they cannot find work in their field. This would be considered underemployed as they have a lower skill set. An individual who works part-time but is looking for full-time work in their field may also qualify.

 

Invalidity and Disability

The disabled and those with partial or severe disabilities are another group that could be included. Although they might not be working, they could still be productive in the economy. This is temporary unemployment in the event of illness. This means that the person is not often included in the unemployment statistics of a country.

 

No Longer Looking for Work

In order to calculate the unemployment rate , a person is no longer considered unemployed if they stop looking for work. In order to count as unemployed, many countries require that a person actively seeks employment. If someone stops actively seeking employment, either on a short-term or long-term basis they are not counted. This is known as “disguised unemployment” if the person has given up looking for work after being discouraged by a lengthy search.

ADVERTISEMENT