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Exercises · Q10

Q.Distinguish between open unemployment and disguised unemployment, giving one example of each.

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Open unemployment occurs when a person who is able and willing to work, and is actively seeking employment, is unable to find any job at all. It is directly visible and measurable — for example, an educated young person in an urban area who has been searching for a job for months without success is a clear case of open unemployment.

Disguised unemployment, by contrast, is not directly visible, because the person concerned does appear to be "working." It occurs when more people are engaged in a task than are actually needed to produce the given output — so that removing some of them would not reduce total output at all. The classic example is a small family farm where several family members work the land together, even though the same output could be produced by a smaller number of them; the "extra" family members are disguisedly unemployed, since their true marginal contribution to output is close to zero. …

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