“The number of people of working age without a job is usually expressed as an unemployment rate, a percentage of the workforce. This rate generally rises and falls in step with the business cycle—cyclical unemployment. But some joblessness is not caused by the cycle, being structural unemployment. There are also voluntary unemployment and involuntary unemployment. Some people who are not in work have no interest in getting a job and probably should not be regarded as part of the workforce. Others choose to be out of work briefly while they look for, or are waiting to start, a new job. This is known as frictional unemployment. In the 1950s, the Phillips curve seemed to show that policymakers could reduce unemployment by having higher inflation. Economists now say there is a NAIRU (non-accelerating inflation rate of unemployment). In most markets, prices change to keep supply and demand in equilibrium; in the labour market, wages are often sticky, being slow to fall when demand declines or supply increases. In these situations, unemployment often increases. One way to tackle this may be to boost demand. Another is to increase labour market flexibility” (The Economist).

Unemployment. (n.d.) In Economics A-Z: Economic terms, topics and jargon. Retrieved October 7, 2009, from