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Difficulty: MediumDemographic Trends, Employment Types, and Skill Development Programs

Which of the following statements concerning demographic trends and types of unemployment in economic development are correct?

  1. Disguised unemployment is characterized by a situation where more workers are engaged in an activity than necessary, resulting in near-zero marginal productivity of labor.Answer
  2. B
    Frictional unemployment refers to a long-term economic imbalance where the skill set of the available workforce does not match the skill requirements of available jobs.
  3. Demographic dividend represents the potential economic growth resulting from a shift in a population's age structure, specifically when the proportion of the working-age population is higher than the non-working dependent population.Answer
  4. D
    The Age Dependency Ratio increases significantly during the peak phase of a country's demographic dividend.

Answer

The correct statements are the one defining disguised unemployment as having near-zero marginal productivity of labor and the one describing demographic dividend as economic growth potential driven by a larger working-age ratio.
Disguised unemployment accurately reflects surplus labor with zero marginal productivity, typical in crowded agricultural fields. Demographic dividend accurately describes the growth window created when the working-age population outnumbers dependents.

Step-by-Step Solution

1
Analyze the concept of disguised unemployment
Disguised unemployment occurs when excess labor yields zero marginal output.
It is a structural feature of agriculture and informal sectors in developing economies.
2
Differentiate between frictional and structural unemployment
Mismatch between available skills and industry demands defines structural unemployment, not frictional.
Frictional unemployment involves temporary transition periods between jobs.
3
Evaluate the definition and metrics of demographic dividend
Demographic dividend requires an expanding working-age population (15–64 years) relative to dependents, which lowers the dependency ratio.
A lower dependency ratio frees up resources for savings, capital formation, and productivity growth.

Key Concept

Demographic Dividend and Unemployment Types
Estimated Time:1m 30s
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Topics

Demographic Trends, Employment Types, and Skill Development Programs