Employment and Unemployment

The concepts of employment and unemployment are most easily defined for a developed capitalist economy that has a market for wage labour. Employment is defined as working for at least one hour a week for some payment, either for a wage or for profit, or commission, or without pay in a family business. However, this definition usually excludes people (mainly women) who provide unpaid household services. Unemployment is defined in terms of not being employed while being available and looking for work. In less developed countries, where wage labour is not a predominant form of employment, the concept of unemployment becomes ‘fuzzy’: the line between employment in the informal sector (selling cigarettes on the street corners) and unemployment is not clearly defined (Turnham 1993). In most economies people may not ‘look for work’ when there are no obvious vacancies available and drop out of the labour force (i.e. the participation rate varies). Since the concept of unemployment may not be well defined labour economists sometimes use the concept of employment-population ratios (or the not-employed to population ratio).