Disguised unemployment:
1. When more than necessary people are employed in a work and if even by removing few of them from work the total production does not change then there exists disguised unemployment in that area.
2. As can be seen here the unemployment is hidden i.e. disguised. Even though people are employed they are employed unnecessarily. This type of unemployment is very common in developing economies like India. According to Rugnar Nurkes, “Given the resources and technique of production if the agriculture sector of over populated developing economies has zero marginal productivity then such countries have disguised unemployment”. From this definition it can be said that disguised unemployment has zero marginal productivity.
3. In India, population is constantly rising. Hence people who demand employment is also increasing at a higher rate. On the other hand, sectors other than agriculture are not quite well developed.
4. So, a very large number of people depend on agriculture for getting employed. The number i.e. the supply exceeds the demand and hence disguised unemployment takes place in agriculture.
5. Even if few labourers are removed from agriculture there is no change in production. This means that the marginal productivity of these labourers is zero. Since the marginal productivity of these labourers is zero they are said to be disguised unemployed.
6. Disguised unemployment can be seen even in urban areas in businesses and trades.
7. For example, the business where more than required family members work and the ones who are either less paid or not paid salaries suffer from disguised unemployment.
Example:
8. To make optimum use of 10 hectare land a maximum of 5 labourers can be employed. But due to unavailability of work, anywhere else additionally 3 members of family also join the same work. Now, even after they join, if the total production does not increase then, the three additional labourers that joined are called disguised unemployed.
9. Although these labourers visibly seem to be unemployed but because their marginal pro ctivity is zero they are part of disguised unemployment.
