Unemployment is a measure of the ability or inability of persons to obtain gainful employment. It is an important indicator of the economic health and performance of a nation’s economy. It is also a useful measure of the effectiveness of government policies designed to stimulate employment and protect workers during periods of joblessness.
The number of people who are unemployed is measured by national authorities using different methods. In most countries, the official unemployment rate is based on a sample survey of households. This method tends to overstate the number of unemployed, especially in boom times when more people are willing and able to work, but it is widely used because of its availability and convenience.
Other measures include those who are inactive in the labour market, such as those incarcerated, students, and elderly persons who are not seeking work and have not made arrangements to start a job within a short period (generally no more than three months). These definitions may give different weight to groups of workers. The official unemployment rates U-1 through U-6 include these groups of workers in varying degrees, with U-3 being the most commonly reported headline unemployment rate.
A high level of unemployment has a wide range of economic impacts. For example, it can cause people to spend less on goods and services, reducing overall economic production. It can also lead to lower tax revenues for governments, making it harder for them to pay for things like the NHS and public services.
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