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Open unemployment of the sort defined above is associated with capitalist economies.

Preliterate communities treat their members as parts of an extended family and thus do
not allow unemployment. In precapitalist societies such as European feudalism, the serfs,
though clearly dominated and exploited by the lords, were never "unemployed" because
they had direct access to the land, and the needed tools, and could thus work to produce
crops. Just as on the American frontier during the nineteenth century, there were day
laborers and subsistence farmers on poor land, whose position in society was somewhat
analogous to the unemployed of today. But they were not truly unemployed, since they
could find work and support themselves on the land.

Under both ancient and modern systems of slave-labor, slave-owners never let their
property be unemployed for long. (If anything, they would sell the unneeded laborer.)
Planned economies such as the old Soviet Union or today's Cuba typically provide
occupation for everyone, using substantial overstaffing if necessary. (This is called
"hidden unemployment," which is sometimes seen as a kind of underemployment,
definition 3.) Workers' cooperatives — such as those producing plywood in the U.S.
Pacific Northwest — do not let their members become unemployed unless the co-op
itself goes bankrupt.

Since not all unemployment may be "open" and counted by government agencies, official
unemployment may be very low even under capitalism. Most poorer capitalist countries
lack a modern welfare state and unemployment insurance so that it is very difficult to
afford being unemployed for very long: they often end up taking jobs below their skill
levels. Those who might be counted as "unemployed" in the rich countries end up instead
being underemployed and not counted.

Others argue that unemployment actually increases the more the government intervenes
into the economy. For example, minimum wages raise costs of doing business and
businesses respond by laying off workers. Laws restricting layoffs make businesses less
likely to hire in the first place leaving many young people unemployed and unable to find
work.

The results of both actions lead to less productivity and are claimed to incur a higher cost
on society as a whole. The results lead to not just higher unemployment but may increase
poverty. This is why the less market oriented countries of Europe often sustain
substantially high unemployment rates in comparison to the United States; that is,
government induced employment through policies designed to protect the worker. The
welfare state then responds with various benefits that are paid for by the middle and
upper class which reduces their ability to consume and is theorised to reduce the
incentive to work hard and innovate. Economists like Ludwig Von Mises, Milton
Friedman, Friedrich Von Hayek, and many others not only believe that the welfare of
society decreases with this kind of intervention but that these economic policies are not
sustainable.
[edit] Government spending as a cause or cure for
unemployment
Though many people care about the number of unemployed, economists typically focus
on the unemployment rate. This corrects for the normal increase in the number of people
employed due to increases in population and increases in the labor force relative to the
population. The unemployment rate is expressed as a percent, and calculated as follows:

As defined by the International Labour Organization, "unemployed workers" are those


who are currently not working but are willing and able to work for pay, currently
available to work, and have actively searched for work.[2]

The ILO describes 4 different methods to calculate the unemployment rate:[3]

• Labour Force Sample Surveys are the most preferred method of unemployment
rate calculation since they give the most comprehensive results and enables
calculation of unemployment by different group categories such as race and
gender. This method is the most internationally comparable.
• Official Estimates are determined by a combination of information from one or
more of the other three methods. The use of this method has been declining in
favor of Labour Surveys.
• Social Insurance Statistics such as unemployment benefits, are computed base on
the number of persons insured representing the total labour force and the number
of persons who are insured that are collecting benefits. This method has been
heavily criticized due to the expiration of benefits before the person finds work.
• Employment Office Statistics are the least effective being that they only include a
monthly tally of unemployed persons who enter employment offices. This method
also includes unemployed who are not unemployed per the ILO definition.

[edit] European Union (Eurostat)