Disguised Unemployment

Readers Question: what is the difference between disguised unemployment and involuntary unemployment

Definition of disguised unemployment. This is when people do not have productive full-time employment, but are not counted in the official unemployment statistics. This may include:

  • People on sickness / disability benefits (but, would be able to do some jobs)
  • People doing part-time work.
  • People forced to take early retirement and redundancy
  • Disguised unemployment could also include people doing jobs that are completely unproductive, i.e. they get paid but they don’t have a job. In a developing economy like China, many workers in agriculture may be adding little if anything to overall unemployment, therefore this type of employment is classed as disguised unemployment.
  • See: The true level of unemployment

Definition of Involuntary Unemployment

This is when people are unable to work because there are insufficient jobs available in an economy. For example, during a great depression. Classical economists argue unemployment is voluntary ‘i.e. wages are too high’ but involuntary unemployment says that people are unemployed for a lack of aggregate demand. Keynes argued a cut in wages would not solve unemployment because it would only reduce AD further.

Involuntary unemployment would be measured by government statistics. E.g. in the 1930s, unemployment rose to 25% in the UK. This was involuntary unemployment.

Note: the definition is somewhat disputed

8 Responses to Disguised Unemployment

  1. Matt July 19, 2008 at 7:33 pm #

    In 1980, what was the economy’s biggest risk–inflation or unemployment?

  2. sundeep March 27, 2009 at 10:39 pm #

    wel, it was inflation due to unemployment.

    • Disguised unemployment June 18, 2013 at 6:13 pm #

      short note Disguised unemployment.

      Please give me a Answer

  3. Rohit Shah February 11, 2010 at 8:31 pm #

    When a person is skilled but is employed for doing unskilled job – What type of situation is it called? Is it also defined as a type of unemploymet. This is since the person is capable to doing better job but he is not able to do better job because of lack of time for doing unskilled job.


  4. verediana June 15, 2011 at 10:43 pm #

    points disccused are well understood, thank you

  5. Thapelo Mokgwaphe March 16, 2013 at 4:22 pm #

    u ar gud @ explaining.thank you vry much

    • Disguised unemployment June 18, 2013 at 6:12 pm #

      Please give me a answer


  1. Definition of Unemployment — Economics Blog - June 3, 2010

    […] may not be counted as unemployed, but, it may really be a type of structural unemployment. See: Disguised Unemployment Natural Rate of Unemployment. This is the level of unemployment when the labour market is in […]