Unemployment and It’s major types | Unemployment Benefits

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The major classification of unemployment

Unemployment is defined as the non-availability of the job (works) for people able and willing to work at the existing wage rate. It is a problem to both developed and developing countries. It creates problems like poverty, inequality, robbery, prostitution, theft, crime, etc, Therefore, solving the UNEMPLOYMENT Problem people who are either unfit for work due to mental or physical reasons or don’t want to work, for example, sadhus, are excluded from the category of unemployed.

Here, again, if there is engagement in some occupation, does not necessarily mean an absence of unemployment People, who are partially employed or engaged in inferior jobs, though they can do better jobs are not adequately employment It is called the state of underemployment which is equally harmful to the prosperity of the country, In the free market economic system (capitalism), full employment is almost impossible, The best that can be done is to keep the number of unemployed people as low as possible In the developing countries like Nepal unemployed can be reduced by increasing investment in human and physical capital, development of infrastructure and industrial sector

Unemployment can be both voluntary and involuntary. Voluntary unemployment is defined as the situation in which people are unemployed because of their choice or they are not working due to laziness or they are not interested to work. On the other hand, involuntary unemployment is defined as the situation in which people are willing to work at the existing wage rate but they are not able to get the work.

Types of Unemployment – Unemployment Benefits

picture for unemployment picture
picture for unemployment(non-copyright from

The major types of unemployment are as follows:

1.Open unemployment: 

Open unemployment is defined as the situation in which some workers have no work to do. They are willing to work at the existing wage rate but they are forced to remain unemployed in the absence of work. These workers are completely idle. Such kind of unemployment is found in developed countries like UAE, UK, Japan, etc as well as urban areas of developing countries.


Underemployment is defined as the Situation in which employed persons are working but less than they are really capable of it. In this situation, people do not get the job or work they are capable of doing or they are trained for. They possess abilities and expertise to do the type of work that could yield larger income.but due to the non-availability of suitable as per their abilities and expertise, they join the inferior occupation.

3.Disguised unemployment: 

Disguised unemployment is defined as the Situation in which a person seems as employed but in fact, he is not employed. In this type of unemployment, the unemployed person so
visible or he/she is hidden. That’s why this type of unemployment a known as the hidden unemployment. In this type of unemployment, too many persons have involved in work or persons are more than actually required. This type of unemployment problem is found in the agriculture sector in developing countries. Due to a lack of employment opportunities outside the agriculture sector, all members of the family are found to be engaged in farming even it is not necessary. If we reduce the involved persons in agriculture, the total production will no decrease because the marginal productivity of some workers is Zero.

4.Cyclical unemployment: 

Cyclical unemployment is defined as the type of unemployment that results due to the operation of trade cycle or business cycle. The trade cycle refers to the regular upward and downward movement in business or overall economic activities. When a business or economic activity is going down, aggregate demand decreases. For which, less production is needed and consequently. fewer workers are needed. this results in the unemployment problem. During the period of the Great Depression in the 1930s, a large number of the labor force was unemployed in developed countries, especially in the USA and Europe.

5. Seasonal unemployment 

Seasonal unemployment is defined as the Situation in which people are out of work and looking for a job during the off-season. For example, ice-cream vendors during the winters and ski-lift Operators during the summer are out of work or they become Unemployed. Similarly, farm labors also remain unemployed except for planting and harvesting season. And it is a common type of unemployment both in the
developed and developing countries.

6. Frictional unemployment: 

Frictional unemployment defined as the situation in which people are looking for a new or better job and employers are looking for the right workers. It is also known as the search unemployment because it occurs when people leave the job and searching for a new job. The main cause of frictional unemployment is imperfect information regarding job vacancies (demand for labor) and supply of labor. There fore, it is of short-term nature. This kind of unemployment is usually found in developed countries.

7. Structural unemployment: 

Structural unemployment is defined as the situation which occurs due to the changes in the structure of the economy. The main cause of structural unemployment is a mismatch between the skills needed for available jobs. This kind of unemployment usually exists in developing countries like Nepal where unemployment is basically structural in nature. Here the large numbers of people are unemployed. Because of the underdeveloped structure of the economy. Structural unemployment can also occur due to the introduction of new technology in the production process. It replaces a man with machines. This can be solved only through rapid economic development.

8.Educated unemployment: 

Educated unemployment refers to unemployment among educated people, i.e., matriculates and higher educated. This is the problem of both developed and developing countries.
Some of these people may be openly unemployed or underemployed. It means that some of the educated people may be doing no any work or maybe in inferior jobs. It is because they may not be able to get work suitable to their qualification or their skill and ability may be less than the required for job In Nepal, large number of educated people are unemployed because of the non-availability of job. It can be solved by the development of industrial sector.

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