It is possible to be neither employed nor unemployed by ILO definitions by being outside of the "labour force." Such people have no job and are not looking for one. Many of them go to school or are retired. Family responsibilities keep others out of the labour force. Still others have a physical or mental disability that prevents them from participating in the labour force. Some people simply elect not to work and prefer to be dependent on others for sustenance. Typically, employment and the labour force include only work that is done for monetary gain. Hence, a homemaker is neither part of the labour force nor unemployed. Also, full-time students and prisoners are considered to be neither part of the labour force nor unemployed. The number of prisoners can be important. In 1999, economists Lawrence F. Katz and Alan B. Krueger estimated that increased incarceration lowered measured unemployment in the United States by 0.17% between 1985 and the late 1990s.In particular, as of 2005, roughly 0.7% of the US population is incarcerated (1.5% of the available working population). Additionally, children, the elderly, and some individuals with disabilities are typically not counted as part of the labour force and so are not included in the unemployment statistics. However, some elderly and many disabled individuals are active in the labour market. In the early stages of an economic boom, unemployment often rises. That is because people join the labour market (give up studying, start a job hunt, etc.)
Cyclical unemployment
Cyclical, deficient-demand, or Keynesian unemployment occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work. Demand for most goods and services falls, less production is needed and consequently, fewer workers are needed, wages are sticky and do not fall to meet the equilibrium level, and unemployment results. Its name is derived from the frequent ups and downs in the business cycle, but unemployment can also be persistent, such as during the Great Depression. With cyclical unemployment, the number of unemployed workers exceeds the number of job vacancies and so even if all open jobs were filled, some workers would still remain unemployed. Some associate cyclical unemployment with frictional unemployment because the factors that cause the friction are partially caused by cyclical variables. For example, a surprise decrease in the money supply may suddenly inhibit aggregate demand and thus inhibit labor demand. Keynesian economists, on the other hand, see the lack of supply of jobs as potentially resolvable by government intervention. One suggested intervention involves deficit spending to boost employment and goods demand. Another intervention involves an expansionary monetary policy to increase the supply of money, which should reduce interest rates, which, in turn, should lead to an increase in non-governmental spending. Unemployment under "full employment"
In demands based theory, it is possible to abolish cyclical unemployment by increasing the aggregate demand for products and workers.