I. Introduction

Labor is the most fundamental productive resource. Wages paid for labor fuel consumer spending, and the output of labor is essential for companies. Likewise, unemployed workers represent wasted potential production within an economy. Consequently, unemployment is a significant concern within macroeconomics. The term unemployment refers to the general condition in which resources are willing and able to produce goods and services but are not engaged in any productive activities. Moreover, it arises when GNP declines over a long period of time and when businesses reduce their output. Cutbacks in production inevitably mean that industries will use less labor and materials. Consequently, some workers will lose their jobs and those seeking new jobs will have a difficulty finding employment. Increased unemployment is a major consequence of cyclical declines in real GNP during the periods of recession. Workers in industries usually are laid off especially those who are engaged in the production of producer durable and consumer goods because investment purchased by business and purchases of durable goods by consumer declines during the period of recessions. While unemployment is most commonly thought of in terms of labor, any of the other production factors such as capital, land and entrepreneurship can be unemployed. The analysis of unemployment especially labor unemployment, goes hand-in-hand with the study of macroeconomics.
The most noted and widely used measure of unemployment is the unemployment rate of labor. To measure the unemployment rate, it must first determine who is eligible and available to work. The labor force consists of people who are able and willing to work. Both those who are employed and those who are unemployed but actively seeking work are counted as being in the labor force. The unemployment rate is the percentage of the labor