The effect of discouraged workers and underemployment is an unemployment rate that understates actual employment.

Question

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Discouraged workers are those who have given up looking for work due to lack of job opportunities, while underemployment refers to workers who are employed but not in jobs that utilize their full potential or skill set. Both these factors contribute to a situation where the unemployment rate does not reflect the true state of employment in the economy, leading to an understatement of actual employment.

The Effect of Discouraged Workers and Underemployment Is an Unemployment