INFLATION AND UNEMPLOYMENT

Inflation and unemployment

IntroductionUnemployment Definition

Unemployment is the inactivity of a person seeking work. This definition of unemployment has many variants and concept that gives rise to controversies and theoretical statistics. Further Unemployment is the situation of a person who wants to work and acquires the ability to do so (including age), but is still not in the job market despite of his research. The lack of employment can result from entry into active life, the desire to return to work after a period of inactivity, dismissal, resignation or voluntary desire to change activity. From the perspective, of economic, unemployment is the result of an imbalance between supply and demand in the market of work. Thesis statement of this paper is the relationship between unemployment and inflation. (Gordon, 1988)

Types of unemployment• The natural unemployment (or frictional) is unemployment that occurs naturally or is likely to occur no matter how economically strong the country is. This is because every day there are, for various reasons, new job seekers, and there's time to arrive from the beginning of the search for employment and an entry into a new job. An unemployment rate of zero cannot be reached. Full employment is achieved when the unemployment rate is around 3.5% to 4%.• Cyclical Unemployment (or Keynesian) corresponds to a slowdown in economic activity causing a temporary reduction of manpower needs in the economy. Companies lay off their ability to adapt production to the decline in economic activity. Cyclical unemployment is decreasing with the return of economic growth, which requires the, hiring of part of businesses.• Structural unemployment relates to changes in economic structures of a country, causing a qualitative mismatch between supply and demand for labor. The development of skills because of technical developments leads to making unemployable part of the workforce that requires no longer jobs that match their qualifications.• Partial unemployment is unemployment that occurs partially and is most likely the result of an abnormal decrease in activity of a company because of forceful reduction in working hours.

• Seasonal unemployment is unemployment that occurs in specific seasons and for some occupations whose activity varies significantly, depending on the time of year. DiscussionUnemployment Rate

The unemployment rate can be calculated as a percentage of the unemployed to the total labor force (the labor force includes both employed workers and unemployed). Unemployment is never evenly distributed among the population. There are regional, ages, sex, ethnic, and other differences. The unemployment rate is the ratio between the number of unemployed and the economically active population.

unemployment rate =

Unemployed workers

Total workforce

Problems measuring the unemployment rate

Finally, the numerator and the denominator used to calculate the unemployment rate is questionable. On the one hand, the unemployment rate relates to the total workforce, while in some countries like France, only private assets at risk of unemployment. On the other hand, the number of unemployed gives only a partial picture of insecurity vis-à-vis the job because it does not include precarious employment, involuntary part-time and early retirement, which can be of disguised unemployment and unrecognized.The unemployment figures indicate how many are not working for pay but seeking employment for pay. It is only indirectly connected with the number of people who are not working at all or working without pay. Therefore, critics believe that current methods of measuring unemployment rate are inaccurate in terms of the ...