Question

Under ............ unemployment the marginal productivity of a worker is equal to zero. (Choose the correct option to fill in the blank)

• A. Seasonal
• B. Structural
• C. Involuntary
• D. Disguised

Hint:

Disguised unemployment = Zero marginal productivity. It is hidden, mostly in rural/agricultural sectors, and doesn’t appear in official unemployment figures.

Answer 1

The Correct Option is D

Disguised Unemployment describes a scenario where more workers are employed than necessary. Removing some workers wouldn't decrease total output, signifying that the marginal productivity of the surplus workers is zero. This is common in the agricultural sectors of developing countries like India. For instance, consider a plot of land needing only 4 workers for cultivation, but employing 7. The extra 3 workers add nothing to the total output; they are disguisedly unemployed. Why not the others?
(A) Seasonal: This occurs when workers are unemployed during certain periods, such as agricultural laborers after a harvest. However, it doesn't mean their productivity is zero when employed.
(B) Structural: This arises from a skills mismatch or lack of job openings, and isn't directly linked to zero marginal productivity.
(C) Involuntary: This refers to individuals wanting to work at the current wage but unable to find employment, which doesn’t necessarily imply zero productivity.
Therefore, only in Disguised Unemployment does additional labor have zero marginal productivity.