{"id":36580,"date":"2024-04-03T06:06:50","date_gmt":"2024-04-03T06:06:50","guid":{"rendered":"https:\/\/edukemy.com\/blog\/?p=36580"},"modified":"2024-04-03T06:06:51","modified_gmt":"2024-04-03T06:06:51","slug":"causes-of-unemployment-upsc-economy-notes","status":"publish","type":"post","link":"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/","title":{"rendered":"Causes of Unemployment &#8211; UPSC Economy Notes"},"content":{"rendered":"\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-economy?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Blog+Economy\" target=\"_blank\" rel=\"noreferrer noopener\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1280\" height=\"300\" src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17.png\" alt=\"\" class=\"wp-image-42386\" srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17-585x137.png 585w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/a><\/figure>\n\n\n\n<p>Unemployment, a pervasive socio-economic challenge, stems from a complex interplay of factors that disrupt the equilibrium between labor supply and demand within an economy. While its manifestations vary across regions and over time, the underlying causes often reflect systemic issues ingrained within the fabric of society and the economy. Structural shifts, technological advancements, cyclical fluctuations, and policy failures are among the primary drivers contributing to unemployment rates. Understanding these causes is paramount for policymakers, economists, and society at large to devise effective strategies aimed at mitigating its adverse effects and fostering inclusive growth and prosperity.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-69e3545d4849a\" class=\"ez-toc-cssicon-toggle-label\"><p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e3545d4849a\"  \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#Causes_of_Unemployment\" title=\"Causes of Unemployment:\">Causes of Unemployment:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#Economic_Causes\" title=\"Economic Causes:\">Economic Causes:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#Structural_Causes\" title=\"Structural Causes:\">Structural Causes:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#Social_Causes\" title=\"Social Causes:\">Social Causes:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#Legal_and_Administrative_Causes\" title=\"Legal and Administrative Causes:\">Legal and Administrative Causes:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#FAQs\" title=\"FAQs\">FAQs<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#1_What_is_structural_unemployment_and_what_causes_it\" title=\"1. What is structural unemployment, and what causes it?\">1. What is structural unemployment, and what causes it?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#2_How_does_cyclical_unemployment_arise_and_what_contributes_to_it\" title=\"2. How does cyclical unemployment arise, and what contributes to it?\">2. How does cyclical unemployment arise, and what contributes to it?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#3_What_role_does_frictional_unemployment_play_in_the_job_market_and_what_causes_it\" title=\"3. What role does frictional unemployment play in the job market, and what causes it?\">3. What role does frictional unemployment play in the job market, and what causes it?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#4_How_does_technological_innovation_impact_unemployment_rates\" title=\"4. How does technological innovation impact unemployment rates?\">4. How does technological innovation impact unemployment rates?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#5_What_are_the_effects_of_government_policies_on_unemployment_levels\" title=\"5. What are the effects of government policies on unemployment levels?\">5. What are the effects of government policies on unemployment levels?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#In_case_you_still_have_your_doubts_contact_us_on_9811333901\" title=\"In case you still have your doubts, contact us on 9811333901.&nbsp;\">In case you still have your doubts, contact us on 9811333901.&nbsp;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/edukemy.com\/blog\/causes-of-unemployment-upsc-economy-notes\/#Visit_our_YouTube_Channel_%E2%80%93_here\" title=\"Visit our YouTube Channel &#8211;&nbsp;here\">Visit our YouTube Channel &#8211;&nbsp;here<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Causes_of_Unemployment\"><\/span><strong>Causes of Unemployment:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Economic_Causes\"><\/span><strong>Economic Causes:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>Decline in Manufacturing Jobs:<\/strong><ul><li><strong>Explanation:<\/strong> Automation and multi-skilling have reduced the demand for human resources in manufacturing.<\/li><li><strong>Example:<\/strong> India experienced a decline of around 1 million manufacturing jobs from 2012 to 2018.<\/li><\/ul><\/li><li><strong>Labour Underutilisation:<\/strong><ul><li><strong>Explanation:<\/strong> Mismatch between the supply and demand for labor extends beyond the unemployed, leading to underutilization.<\/li><li><strong>Example:<\/strong> A substantial portion of the workforce remains underutilized due to a lack of suitable job opportunities.<\/li><\/ul><\/li><li><strong>Rise in Voluntary Unemployment:<\/strong><ul><li><strong>Explanation:<\/strong> People choose not to work below a certain income level after investing in education.<\/li><li><strong>Example:<\/strong> Individuals may opt for unemployment rather than accepting jobs with inadequate compensation.<\/li><\/ul><\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Structural_Causes\"><\/span><strong>Structural Causes:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>Over-reliance on Agriculture:<\/strong><ul><li><strong>Explanation:<\/strong> Dependence on agriculture, providing seasonal employment for only a few months.<\/li><li><strong>Example:<\/strong> A significant portion of the population relies on agriculture, leading to seasonal unemployment.<\/li><\/ul><\/li><li><strong>Infrastructural Bottlenecks:<\/strong><ul><li><strong>Explanation:<\/strong> Insufficient infrastructure growth and low investments in manufacturing limit job opportunities in the secondary sector.<\/li><li><strong>Example:<\/strong> Inadequate infrastructure development hinders the expansion of manufacturing industries, impacting employment.<\/li><\/ul><\/li><li><strong>Outdated Curriculum:<\/strong><ul><li><strong>Explanation:<\/strong> Educational curriculum in schools and colleges does not align with current industry demands.<\/li><li><strong>Example:<\/strong> Lack of alignment between education and industry requirements leads to structural unemployment.<\/li><\/ul><\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Social_Causes\"><\/span><strong>Social Causes:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>Rapid Population Growth:<\/strong><ul><li><strong>Explanation:<\/strong> Job creation has not kept pace with the expanding workforce.<\/li><li><strong>Example:<\/strong> The increasing population puts pressure on the job market, making it challenging to create sufficient employment opportunities.<\/li><\/ul><\/li><li><strong>Gender Inequality:<\/strong><ul><li><strong>Explanation:<\/strong> Limited job opportunities for women due to cultural norms, inadequate access to education, and training.<\/li><li><strong>Example:<\/strong> Cultural biases and limited educational opportunities contribute to gender-based employment disparities.<\/li><\/ul><\/li><li><strong>Issue of Decent Work:<\/strong><ul><li><strong>Explanation:<\/strong> Challenges in obtaining fair wages, job security, and favorable working conditions.<\/li><li><strong>Example:<\/strong> Workers facing precarious employment conditions, inadequate wages, and job insecurity.<\/li><\/ul><\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Legal_and_Administrative_Causes\"><\/span><strong>Legal and Administrative Causes:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>Shrinking Public Sector:<\/strong><ul><li><strong>Explanation:<\/strong> Decline in government jobs.<\/li><li><strong>Example:<\/strong> Reduction in public sector employment opportunities, impacting overall job availability.<\/li><\/ul><\/li><li><strong>Inadequate Labor Market Policies:<\/strong><ul><li><strong>Explanation:<\/strong> Policies related to labor regulations and industrialization may not be effectively implemented or aligned with changing economic needs.<\/li><li><strong>Example:<\/strong> Policies may not address the evolving demands of the job market, leading to inefficiencies.<\/li><\/ul><\/li><li><strong>Inefficient Employment Exchanges:<\/strong><ul><li><strong>Explanation:<\/strong> Ineffectiveness in connecting job seekers with employers.<\/li><li><strong>Example:<\/strong> The existing employment exchange system may not efficiently match job seekers with available opportunities.<\/li><\/ul><\/li><li><strong>Lack of Entrepreneurship and Start-up Support:<\/strong><ul><li><strong>Explanation:<\/strong> The ecosystem for entrepreneurship and start-ups is not robust.<\/li><li><strong>Example:<\/strong> Limited support for entrepreneurship and start-ups hampers job creation in emerging sectors.<\/li><\/ul><\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_What_is_structural_unemployment_and_what_causes_it\"><\/span><strong>1. What is structural unemployment, and what causes it?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Answer:<\/strong> Structural unemployment occurs when there is a mismatch between the skills demanded by employers and the skills possessed by the workforce. Causes include technological advancements, changes in consumer preferences, and globalization, which can render certain job skills obsolete.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_How_does_cyclical_unemployment_arise_and_what_contributes_to_it\"><\/span><strong>2. How does cyclical unemployment arise, and what contributes to it?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Answer:<\/strong> Cyclical unemployment is closely tied to the business cycle, rising during economic downturns and falling during periods of growth. Factors contributing to cyclical unemployment include decreases in consumer spending, reduced business investment, and overall declines in economic activity.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_What_role_does_frictional_unemployment_play_in_the_job_market_and_what_causes_it\"><\/span><strong>3. What role does frictional unemployment play in the job market, and what causes it?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Answer:<\/strong> Frictional unemployment occurs when individuals are in between jobs or are transitioning into the workforce. Causes include voluntary job separations, geographical mobility barriers, and information asymmetry between job seekers and employers, such as mismatched expectations.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_How_does_technological_innovation_impact_unemployment_rates\"><\/span><strong>4. How does technological innovation impact unemployment rates?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Answer:<\/strong> Technological innovation can both create and eliminate jobs. While it may lead to the automation of certain tasks, reducing the need for human labor in some industries, it also creates new job opportunities in emerging sectors. However, the transition can lead to short-term unemployment as workers may require retraining to adapt to new technologies.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_What_are_the_effects_of_government_policies_on_unemployment_levels\"><\/span><strong>5. What are the effects of government policies on unemployment levels?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Answer:<\/strong> Government policies can influence unemployment through various channels. For instance, fiscal policies such as taxation and government spending can impact aggregate demand, affecting overall employment levels. Additionally, labor market regulations, minimum wage laws, and unemployment benefits can all have implications for unemployment rates, depending on their design and implementation.<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Essay\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/UPSC-Essay-Course-1280\u00d7300-1-3.svg\" alt=\"\" class=\"wp-image-42688 lazyload\" width=\"781\" height=\"182\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 781px; --smush-placeholder-aspect-ratio: 781\/182;\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"block-c6ab63ae-7083-4831-b519-cb89dacafb18\"><span class=\"ez-toc-section\" id=\"In_case_you_still_have_your_doubts_contact_us_on_9811333901\"><\/span><strong>In case you still have your doubts, contact us on 9811333901.<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p id=\"block-52c5a91b-6ed6-46e3-b781-7cc0c63a0b76\">For UPSC Prelims Resources,&nbsp;<a href=\"https:\/\/edukemy.com\/upsc-cse-prelims-resource-centre\" target=\"_blank\" rel=\"noreferrer noopener\">Click here<\/a><\/p>\n\n\n\n<p id=\"block-d014fe86-d628-49d8-82ce-6c60dc6e7a73\">For Daily Updates and Study Material:<\/p>\n\n\n\n<p id=\"block-38177954-e668-4d8d-b250-d0fbd5a09390\">Join our Telegram Channel &#8211;&nbsp;<a href=\"https:\/\/t.me\/WithEdukemy4IAS\" target=\"_blank\" rel=\"noreferrer noopener\">Edukemy for IAS<\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\" id=\"block-49ca2fe3-109f-4a88-b72e-9df49c3d328e\"><li>1. 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Mains Answer Writing Practice &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3mZuVxl\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"block-43ccddc1-5348-445f-ab6b-7baaf29fe58d\"><span class=\"ez-toc-section\" id=\"Visit_our_YouTube_Channel_%E2%80%93_here\"><\/span>Visit our YouTube Channel &#8211;&nbsp;<a href=\"https:\/\/www.youtube.com\/@EduKemyforIAS\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n","protected":false},"excerpt":{"rendered":"<p>Unemployment, a pervasive socio-economic challenge, stems from a complex interplay of factors that disrupt the equilibrium between labor supply and demand within an economy<\/p>\n","protected":false},"author":17,"featured_media":36581,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[209],"tags":[235,831,232,213,140],"class_list":["post-36580","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy-notes","tag-economy-notes","tag-unemployment","tag-upsc","tag-upsc-notes","tag-upsc_preparation_strategy"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/36580","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/comments?post=36580"}],"version-history":[{"count":1,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/36580\/revisions"}],"predecessor-version":[{"id":36582,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/36580\/revisions\/36582"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media\/36581"}],"wp:attachment":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media?parent=36580"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/categories?post=36580"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/tags?post=36580"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}