Unemployment

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Unemployment occurs when a person is available and willing to work but currently without work. The prevalence of unemployment is usually measured using the unemployment rate, which is defined as the percentage of those in the labor force who are unemployed. The unemployment rate is also used in economic studies and economic indices such as the United States' Conference Board's Index of Leading Indicators as a measure of the state of macroeconomics.

Keynesian economics emphasizes unemployment resulting from insufficient effective demand for goods and services in the economy (cyclical unemployment). Others point to structural problems and inefficiencies inherent in labour markets; structural unemployment involves mismatches between demand and supply of laborers with the necessary skillset, sometimes induced by disruptive technologies or globalisation. Classical or neoclassical economics tends to reject these explanations, and focuses more on rigidities imposed on the labor market from the outside, such as unionization, minimum wage laws, taxes, and other regulations that may discourage the hiring of workers (classical unemployment). Yet others see unemployment as largely due to voluntary choices by the unemployed and the time it takes to find a new job (frictional unemployment). Behavioral economics highlights phenomena such as sticky wages and efficiency wages which may lead to unemployment.

There is also disagreement on how exactly to measure unemployment. Different countries experience different levels of unemployment; traditionally, the United States experiences lower unemployment levels than countries in the European Union, although there is variant there, with countries like the UK and Denmark outperforming Italy and France and it also changes over time (e.g. the Great Depression) throughout economic cycles.