Disguised Unemployment

What is Disguised Employment?

Disguised unemployment refers to when a large portion of the labor force is not employed or is doing so in a redundant way that worker productivity falls below zero. Unemployment does not impact aggregate output. Hidden unemployment is when productivity falls and there are too many workers to fill the jobs.



  • Disguised unemployment is a form of unemployment that does no affect the overall economic output.
  • It can happen when productivity is low, or when too many people are doing too little work.
  • It can also refer to any population member that isn’t working at its full capacity.

Understanding disguised unemployment

In developing countries, where large populations result in a surplus of labor force, there is often a disguised unemployment. It can be characterised by low productivity.


Hidden unemployment, also known as hidden unemployment, refers to any part of the population that is not working at full capacity. However they are often not included in the official unemployment statistics. This could include people working at a low level of productivity or those who do not have the ability to find work.


Another way of thinking about disguised unemployment, is to say that people have jobs but not in very efficient ways. They are not being paid for their skills or are working in less-than-optimal jobs (possibly because they don’t have the market to recognize their talents), or both.

There are many kinds of disguised unemployment.

Types and types of disguised unemployment


Disguised unemployment can be a situation in which part-time employees are working for less than full-time if they wish to pursue full-time employment. It also covers those who accept employment that is lower than their skill level. In these cases, disguised unemployment is also known as “underemployment”, and refers to anyone who works in some capacity but does not work at their full potential.


If a person has a master’s degree in business administration (MBA), and is willing to accept a full-time job as a cashier due to inability to find work, they may be considered unemployed. They are working below their skills. Underemployed may also include someone who is part-time working in their chosen field and wants to be full-time.


Illness, Disability

A third group of people that might be included are those who have been diagnosed as partially or severely disabled. Although they may not be working actively, they may still be able and capable of contributing to the economy. This disguised unemployment is temporary when someone is sick and is usually categorized as disability assistance. This means that the individual is not usually included in the unemployment statistics for a country.


No Longer Looking for Work

If a person ceases looking for work, no matter the reason, they are not considered unemployed when it come to calculating the unemployment rates. For a person to be counted unemployed, most countries require them to actively search for employment. A person is considered to have given up on looking for work. This can be classified as disguised unemployment if the person stops searching for work because they are discouraged after a long search.

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