Question

Would you expect hidden unemployment to be higher, lower, or about the same when the unemployment rate is high, say 10%, versus low, say 4%? Explain.

Short answer

Individuals who are either unemployed or discouraged workers all come under hidden unemployment.

Step-by-step solution

Step 1. Underemployment

Underemploymnet is a situation, it includes all those individuals who are highly skilled and doing a low pay job according to their skills or when a highly educated person is doing a low skill or part time job and would prefer a high skill or a full time job.

Step 2. Discouraged Workers

those workers who are eligible for jobs but have they have stopped looking for job because they might not find suitable options they are looking for.

Step 3. Explanation

so weak labor force is generally the indication of rise in unemployment rate. The reason behind weak labor force is either discouraged workers or underemployed individuals. These are the reasons which increase hidden underemployment

Step 4. Conclusion

So conclusion is if unemployment rate increases then hidden underemployment will also increase.