The natural unemployment rate

Employment is a very important indicator inmacroeconomics. It refers to the number of able-bodied adults (over 16) who have a job. Unfortunately, not all adult able-bodied people have jobs, there are also unemployed citizens. Unemployment in a market economy characterizes the number of adult able-bodied population who are unemployed, but are actively searching for it. The total number of unemployed and employed citizens is a labor force.

The calculation of unemployment is carried out using various indicators, but generally accepted, incl. and in the International Labor Organization, the norm of unemployment is considered.

Unemployment in a market economy is represented bya socio-economic phenomenon in which a certain proportion of the workforce is not used in the production of services and goods. At the same time, the workforce is understood as the number of employed and unemployed.

The following types of unemployment stand out:

  • Frictional
  • Structural
  • Institutional
  • Cyclic
  • Seasonal

Unemployment, related to the time required to find a new job, refers to frictional unemployment. Its duration can be a period of time from 1 month to 3 years.

Frictional unemployment arises as a consequencedynamic development of the labor market. Part of the employees willingly decided to change their job, finding, for example, a better-paid or more interesting job. The other part of the employees are actively seeking work because of the dismissal from the existing place of work. The third part of workers only enter the labor market of labor or for the first time come out on it because of a natural displacement from the category of inactive population, from the economic point of view, in the opposite category.

Unemployment associated with technologicalchanges occurring in production and changing the structure of demand for workers - structural unemployment. It occurs when an employee who has been fired from one industry can not find work in another industry.

Structural unemployment occurs when the territorial or sectoral structure of demand for labor changes. Over time, in production technology and in the structure of consumer demand significant changes occur thatare the cause of the change in the structure of the total demand for labor. If the demand for labor of a particular profession or in a certain region falls, then unemployment appears as a result. Workers who are released from production are not able to quickly change their qualifications and profession or change their place of residence, therefore they are forced to remain unemployed for some time.

Economists, as a rule, do not make clearboundaries between structural and frictional unemployment, since in both cases the dismissed workers are actively searching for a new job.

It is worth noting that these types of unemployment inthe economy exists constantly, since it is impossible to completely reduce them to zero or to destroy them. People will be looking for a new job, striving for financial well-being, and firms, in turn, will seek to hire the most qualified employees, as this is justified by their desire to maximize profits. That is, in the market economy, the demand and supply indicators are constantly fluctuating in the labor market.

Since the existence of structural and frictional unemployment is inevitable, economists have summed up their sum as a natural level of unemployment

The natural rate of unemployment impliesunder such a level of unemployment, which corresponds to full employment (consists of a structural and frictional form of unemployment.The causes of the natural level of unemployment are due to natural grounds, such as migration, turnover of staff, demographic reasons.

If there is only a natural level of unemployment in the economy, then this situation is called full employment.

The causes of the natural level of unemployment -the balance of labor markets, when the number of employees looking for equal, coincides with the number of vacancies. Therefore, full-time employment does not mean 100% unemployment, but only a certain minimum level of unemployment. The natural level of unemployment is to a certain extent a positive development.