What is disguised unemployment?

Correct option is B

The correct answer is (b) More people are employed than required for a job.

• Disguised unemployment occurs when more people are employed in a job than are actually needed.

• In this situation, even though these workers may be formally employed, they do not contribute effectively to the production process because their work is not essential, or their skills are underutilized. This type of unemployment is often seen in sectors like agriculture or family-based businesses, where more workers are engaged than necessary for the amount of output produced.​

Information Booster:
• Disguised unemployment is most common in agriculture and family-run businesses, where more people are working than needed for the tasks at hand.
• Types of Unemployment:

• Frictional Unemployment: Occurs when individuals are temporarily unemployed while transitioning between jobs or looking for the right job.

• Structural Unemployment: Happens when there is a mismatch between the skills of workers and the requirements of jobs, often due to technological changes or shifts in the economy.

• Cyclical Unemployment: Results from fluctuations in the business cycle. During periods of economic downturn or recession, the demand for goods and services decreases, leading to job cuts.

• Seasonal Unemployment: Occurs when workers are unemployed at certain times of the year due to the nature of their work, such as in agriculture, tourism, or retail industries.

• Educated Unemployment: Happens when educated individuals are unable to find suitable employment, often due to a lack of job opportunities in their field.

• Underemployment: Refers to workers employed in jobs that do not require their full skill set or working part-time when they would prefer full-time work.

Additional Information:

• Disguised unemployment can be seen as a misallocation of resources, where labor is wasted and does not contribute effectively to economic output.

• Solving disguised unemployment involves creating more productive jobs, investing in skill development, and encouraging economic diversification.