ABSTRACT
This chapter introduces students of industrial relations to the economic analysis of unemployment in a non-technical way. It describes the unemployment explicitly to welfare-theoretic concepts used in economics to evaluate the performance of labour markets. The chapter discusses some light on the links between i.r.f, l.m.f. and unemployment by applying the i.r.f. concept to trade unions and collective bargaining performance. It deals with the economic analysis of unemployment by introducing a framework and concepts. The chapter explores unemployment to m.f. and also discusses the relationship between i.r.f. and unemployment. Unemployment is temporary when the market labour demand schedule shifts back to its original position because demand conditions in the goods market improve after a while. The acceptance of voluntary and involuntary unemployment depends on different welfare criteria. In the basic neo-classical labour market model this problem is generally neglected by assuming that the real wage will fall when involuntary unemployment exists.
