Economists don't count everyone without a job as unemployed
A retiree, a full-time student and a stay-at-home parent may all lack paid work, yet none counts as unemployed. To labour economists, you are unemployed only if you are actively hunting for a job. That single definition shapes the headline figures politicians argue over every month.
Labour economics studies work as an ingredient of production, examining the markets where employers and workers meet and the choices each side makes. It asks how age, education, gender and having children affect how much people want to work, and how firms decide what kinds of labour to hire. Its wider agenda covers schooling, inequality, discrimination, unions, automation, employer market power and policies like pensions, jobless benefits and minimum wages.
The micro view assumes workers weigh pay against the pull of leisure, aiming to get the most satisfaction across a lifetime, while employers hire to maximise profit. The macro view tallies the totals. The labour force is everyone of working age who either has a job or is actively seeking one. People outside it include children, those in prisons or psychiatric institutions, stay-at-home spouses, members of the military and anyone not looking. The unemployment rate divides jobseekers by the labour force; the employment rate divides the employed by the adult population. Self-employed people count as employed.
Economists distinguish stocks from flows. Employment, unemployment and unfilled vacancies are snapshots at one moment; flows describe movement over time, such as births, migration, new entrants and retirements reshaping the workforce. Unemployment rises as people lose jobs or start looking, and falls as they find work or give up searching.
Not all joblessness is alike. Frictional unemployment reflects the time it takes to find a suitable role, and technology such as internet search has shortened that hunt. Structural unemployment arises when an industry simply has fewer jobs than qualified people wanting them, perhaps because the economy has shifted or high wages attract too many applicants. Seasonal unemployment follows the calendar, as when retailers shed staff after the holiday shopping rush. A well-functioning labour market, by spreading tasks through division of labour, can lift efficiency and output across whole economies.
Source: Labour economics
