Which one of the following types of unemployment in economics is also regarded as disguised unemployment, especially in the context of agriculture and developing economies?

Difficulty: Easy

Correct Answer: Underemployment

Explanation:


Introduction / Context:
Disguised unemployment is a standard concept in development economics and labour economics, particularly when analysing rural and agricultural labour markets in developing countries. Many objective type questions ask you to identify the term that best matches a verbal description. Here the question asks which form of unemployment is also known as disguised unemployment. Understanding the meaning of disguised unemployment and how it differs from other types of unemployment is essential.


Given Data / Assumptions:
- The focus is on the concept of disguised unemployment as defined in economics textbooks.
- Four types of unemployment are listed: underemployment, frictional, seasonal and cyclical unemployment.
- You must choose the term that essentially describes a situation where more workers are engaged than actually needed, with some of them contributing almost zero marginal productivity.


Concept / Approach:
Disguised unemployment refers to a situation where the number of workers employed on a job is more than actually required to produce the existing level of output. If a few of these workers were withdrawn, total output would not fall. In this case the marginal productivity of some workers is nearly zero. This is commonly seen in over crowded agricultural holdings or informal sector activities. Such workers are technically employed but are not fully utilised, so they are effectively underemployed. Therefore, underemployment is closely associated with and often considered another name for disguised unemployment.


Step-by-Step Solution:
Step 1: Recall the definition of underemployment. Underemployment occurs when a worker is employed, but not in a job that fully uses their time, skills or productive capacity. For example, five family members may be working on a small farm that actually needs only three full time workers.Step 2: Connect this with disguised unemployment. In such a scenario, removal of two workers from the farm would not reduce total output, so those extra workers are in disguised unemployment. They appear employed but effectively add little or no extra output.Step 3: Consider frictional unemployment. This arises when people are temporarily between jobs or searching for new work. It is not about surplus workers on the same job, so it is different from disguised unemployment.Step 4: Consider seasonal unemployment. This occurs when workers are employed only during certain seasons, such as harvesting. It reflects a lack of year round employment rather than surplus labour on a given task.Step 5: Consider cyclical unemployment. This is associated with downturns in the business cycle, such as recessions. Again, it is not about hidden surplus labour on an existing activity.


Verification / Alternative check:
To verify your answer, think of the classic textbook example from Indian agriculture. A piece of land can be farmed efficiently by three workers, but extra family members also work on it because there are no alternative jobs. If two of them shift to non farm work, farm output remains unchanged. Those two were in disguised unemployment and at the same time underemployed, because their potential was not used elsewhere. This thought experiment confirms that underemployment is the closest match.


Why Other Options Are Wrong:
Frictional unemployment is wrong because it deals with short term job search and mobility, not surplus workers on a single job. Seasonal unemployment is wrong because it describes periods without work in certain seasons, rather than excessive labour in the same season. Cyclical unemployment is wrong because it is linked to macroeconomic fluctuations, not hidden surplus labour in a specific activity.


Common Pitfalls:
Candidates sometimes confuse seasonal and disguised unemployment because both are common in agriculture. However, seasonal unemployment means no work in off season, whereas disguised unemployment means too many people sharing the same work in season. Another pitfall is to think that any form of unemployment in rural areas is disguised, which is not correct. The technical definition is tied to zero or very low marginal productivity of some workers who still appear employed.


Final Answer:
The type of unemployment that is also regarded as disguised unemployment is Underemployment.

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