Why is unemployment an economic problem?

unemployment


Unemployment. Average annual unemployment rates by federal state in 2015

Unemployment. Number of unemployed and unemployment rates for Germany


Imbalance on the labor market, in which the type and amount of work offered exceeds the type and amount demanded, so that some of the willing and able-bodied economically active persons are temporarily out of work. In the case of unemployment, one speaks of underutilization of the production factor labor in the sense of underemployment (see there), i. This means that the available labor supply (labor potential) is not used to the full extent for the production of goods and services.

In principle, a distinction can be made between voluntary unemployment (e.g. when changing jobs) and involuntary unemployment (e.g. when losing a job due to dismissal) and between permanent and temporary unemployment. Depending on the causes of unemployment, the terms frictional unemployment (see there), seasonal unemployment (see there), cyclical unemployment (see there) and structural unemployment (see there) are differentiated. Differentiation according to other characteristics such as youth unemployment or long-term unemployment is also common.

Reducing unemployment and promoting employment through appropriate measures is the most important objective of labor market policy and an economic policy objective. Nonetheless, conflicts with other macroeconomic goals (e.g. price level stability) can arise, as expressed in the Phillips curve (see there).

Among other things, high unemployment has negative effects on the macroeconomic development, on the growth of the economy and on the financing of the social systems, because on the one hand high costs e.g. B. caused by the payment of wage replacement benefits and the financing of labor market policy measures. On the other hand, high unemployment has resulted in reduced government revenues due to tax shortfalls, e.g. B. in wage and income tax or in sales tax due to falling consumption of goods. In addition, the fight against unemployment is also essential for socio-political reasons (material losses, impairment of self-esteem).

Duden Wirtschaft from A to Z: Basic knowledge for school and study, work and everyday life. 6th edition. Mannheim: Bibliographisches Institut 2016. Licensed edition Bonn: Federal Agency for Civic Education 2016.