The Original Measurement of the Unemployment Rate is Obsolete-Interpretation of the Unemployment and Inactivity is Cumbersome and Redundant

Tamas Banfi, Gabor Kurthy


In a society which can be described by the single-earner family model, unemployment and the unemployment rate could be relevant category of the economy in general, and that of macroeconomics in particular. In the 20th century, the share of employed women rose gradually, and as a result the traditional family model disintegrated by the second half of the century. The predominance of the dual-income family and the single-adult household model (cannot be regarded as insignificant), which crowded out the single-earner family model, does not allow the grouping of the population according to labour market criteria in the earlier manner even logically and it is also not supported by actual practice. If we want to measure the joint proportion of the unemployed and the inactive, we can only compare it to the number of working-age population, as the employment rate is the number of the employed compared to the working-age population.

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