Explain Disguised Unemployment With an Example

By Balaji

Updated on: February 17th, 2023

Disguised Unemployment is a situation where workers are employed but left without work for an extended period. As a result, their potential is not utilised and their efforts do not always have an impact on the final product. Someone who does not actually work but believes that they are employed may be engaging in disguised unemployment. Due to underutilization, this situation may make workers feel unsatisfied.

Table of content

1. Disguised Unemployment and its Example
2. Explain Disguised Unemployment With an Example

Disguised Unemployment and its Example

When labour is employed in a job but not actually used to produce goods and services, the situation is referred to as disguised unemployment or hidden unemployment. In other words, this type of employment is similar to unemployment in that it does not increase economic output.

When a labour force’s skills are not fully utilised, it is possible that disguised unemployment is simply a form of underemployment. But in many other situations, such unemployment might simply be brought on by the absence of other production alternatives where the extra labour could be used profitably.

Example of Disguised Unemployment

This kind of unemployment is typically found in the agricultural sector in rural areas, such as when a family of 9 is all working on the same agricultural plot. However, there won’t be any change in output if 4 people leave it. Thus, these 4 individuals are actually dealing with pretended unemployment.

Summary: