Question

Define disguised unemployment. State its implications on output and employment in a country.

Hint:

Disguised unemployment reflects inefficiency in labor utilization, reducing overall productivity and economic growth.

Answer 1

Definition: Disguised unemployment refers to a situation where more people are employed than required, resulting in zero or negligible marginal productivity. Implications: Inefficient Labor Use: Resources are underutilized, and overall economic productivity remains low. Lower GDP: Excess labor in low-productive sectors like agriculture fails to contribute to GDP growth effectively. Hidden Unemployment: The extra workforce could be redeployed to other sectors without affecting current output levels.