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Unemployment Rate: Concepts and Indicators

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  • Vintu, Denis

Abstract

Unemployment is a central indicator in macroeconomic analysis, reflecting both the performance of an economy and the well-being of its population. This paper examines unemployment from theoretical, empirical, and policy perspectives, with a particular focus on the Republic of Moldova. It begins by defining unemployment and its role as an economic and social indicator, followed by an overview of key theoretical frameworks, including Classical and Keynesian perspectives, the natural rate of unemployment, NAIRU, and the Phillips Curve. Various types of unemployment—frictional, structural, cyclical, and seasonal—are analyzed alongside methods of measurement such as labor force surveys and the employment-to-population ratio. The paper identifies major causes of unemployment, ranging from economic downturns and technological change to globalization, skill mismatches, and demographic factors. The consequences are explored in economic terms, such as GDP loss measured by Okun’s Law, and in social terms, including poverty, inequality, and political instability. Policy responses are discussed, including fiscal and monetary measures, education and training programs, active labor market policies, and structural reforms. A case study of the Republic of Moldova provides insight into recent unemployment trends, underlying causes, and the effectiveness of government responses. Emerging challenges—such as the impact of artificial intelligence, the rise of green jobs, global economic uncertainty, and labor mobility—are examined to assess the country’s future labor market trajectory. The findings highlight that unemployment is a multidimensional issue requiring integrated strategies that balance economic growth, social inclusion, and environmental sustainability. For Moldova, success will depend on its ability to strengthen domestic job creation, enhance workforce skills, and reduce dependence on external labor markets, thereby ensuring a resilient and inclusive labor market in the face of global change.

Suggested Citation

  • Vintu, Denis, 2025. "Unemployment Rate: Concepts and Indicators," MPRA Paper 125701, University Library of Munich, Germany, revised Jul 2025.
    • Handle: RePEc:pra:mprapa:125701
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    File URL: https://mpra.ub.uni-muenchen.de/125701/1/MPRA_paper_125701.pdf
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    References listed on IDEAS

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    1. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
    2. Laurence Ball & N. Gregory Mankiw & David Romer, 1988. "The New Keynsesian Economics and the Output-Inflation Trade-off," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 1-82.
    3. Lawrence F. Katz & Olivier Blanchard, 1999. "Wage Dynamics: Reconciling Theory and Evidence," American Economic Review, American Economic Association, vol. 89(2), pages 69-74, May.
    4. Lucas, Robert E, Jr & Rapping, Leonard A, 1969. "Real Wages, Employment, and Inflation," Journal of Political Economy, University of Chicago Press, vol. 77(5), pages 721-754, Sept./Oct.
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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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