Unemployment occurs when people who are without work are actively seeking paid work.

Trapped in Unemployment by CBS News


The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force.

In mathematics, a percentage is a number or ratio expressed as a fraction of 100.

Unemployment Benefits: The 99ers by CBS News


During periods of recession, an economy usually experiences a relatively high unemployment rate.

In economics, a recession is a business cycle contraction which results in a general slowdown in economic activity.


According to International Labour Organization report, more than 200 million people globally or 6% of the world's workforce were without a job in 2012.

The International Labour Organization is a United Nations agency dealing with labour issues, particularly international labour standards, social protection, and work opportunities for all.


There remains considerable theoretical debate regarding the causes, consequences and solutions for unemployment.


Classical economics, New classical economics, and the Austrian School of economics argue that market mechanisms are reliable means of resolving unemployment.

The Austrian School is a school of economic thought that is based on the concept of methodological individualism – that social phenomena result from the motivations and actions of individuals.

New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical framework.

Classical economics asserts that markets function best with minimal government interference.


These theories argue against interventions imposed on the labor market from the outside, such as unionization, bureaucratic work rules, minimum wage laws, taxes, and other regulations that they claim discourage the hiring of workers.

Minimum wage law is the body of law which prohibits employers from hiring employees or workers for less than a given hourly, daily or monthly minimum wage.

A minimum wage is the lowest remuneration that employers must legally pay their workers.


Keynesian economics emphasizes the cyclical nature of unemployment and recommends government interventions in the economy that it claims will reduce unemployment during recessions.

Keynesian economics are the various theories about how in the short run, and especially during recessions, economic output is strongly influenced by aggregate demand.


This theory focuses on recurrent shocks that suddenly reduce aggregate demand for goods and services and thus reduce demand for workers.

In macroeconomics, aggregate demand or domestic final demand is the total demand for final goods and services in an economy at a given time.


Keynesian models recommend government interventions designed to increase demand for workers; these can include financial stimuli, publicly funded job creation, and expansionist monetary policies.


Its namesake, economist John Maynard Keynes, believed that the root cause of unemployment is the desire of investors to receive more money rather than produce more products, which is not possible without public bodies producing new money.

John Maynard Keynes, 1st Baron Keynes CB FBA, was a British economist.


In addition to these comprehensive theories of unemployment, there are a few categorizations of unemployment that are used to more precisely model the effects of unemployment within the economic system.


The main types of unemployment include structural unemployment which focuses on structural problems in the economy and inefficiencies inherent in labour markets, including a mismatch between the supply and demand of laborers with necessary skill sets.

Structural unemployment is a form of unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers.

Labour economics seeks to understand the functioning and dynamics of the markets for wage labour.


Structural arguments emphasize causes and solutions related to disruptive technologies and globalization.

Globalization or globalisation is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture.


Discussions of frictional unemployment focus on voluntary decisions to work based on each individuals' valuation of their own work and how that compares to current wage rates plus the time and effort required to find a job.

Frictional unemployment is the unemployment that results from time spent between jobs when a worker is searching for, or transitioning from one job to another.


Causes and solutions for frictional unemployment often address job entry threshold and wage rates.


Behavioral economists highlight individual biases in decision making, and often involve problems and solutions concerning sticky wages and efficiency wages.

Nominal rigidity, also known as price-stickiness or wage-stickiness, describes a situation in which the nominal price is resistant to change.

In labor economics, the efficiency wage hypothesis argues that wages, at least in some markets, form in a way that is not market-clearing.

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