Joblessness or unemployment is prevalent in every economy and it is yet another important macroeconomic factor that shows the growth and productivity of a Country.We usually don’t use the term UNEMPLOYMENT but we do use JOBLESSNESS in our daily lives. Both are the same but there comes a  difference when we are saying UNEMPLOYMENT RATE in an economy.

Unemployment Rate Calculation

Unemployment rate is the calculated is the Number of Unemployed People Divided by the Labor Force.


Unemployment = \frac{U }{U+E} \ast 100\%

Which also means :

Unemployment = \frac{U }{Labor\ Force} \ast 100\%

By the term U+E we mean Unemployed+Employed. Let us discuss the difference between being employed, unemployed and not willing to work at all.


These are people who are working and performing any paid work or service. Such are also those people who might be on leave, ill, strike or Vacation but they are still considered employed as long as they are working.


Such individuals are those who are willing to work but are jobless at the moment. These are the ones who are actively looking for a job and salary to be paid for their service. Note that these people are ones who are taking steps to find a work for themselves.

Not in Labor Force

Let say an individual is not willing to work at all because it wants to spend time with its children. Or because it has made some decisions that leads him/her to the situation of quitting a job and staying at home. Such are those which are not included in the Labor Force. This also includes people who are retired, too sick or ill to work and simply does not wishes to find a job.

So when calculating the Unemployment rate, we need to note this important point that it Include only those who are Working (Employed) + those who are willing to work but cannot find a Job (Unemployed). It excludes the category of those who are not willing to work for any reason at all.


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