This chapter focuses on several important topics for labor markets: the costs of unemployment, the effects of digitization on labor markets, informality, unemployment, and distinguishes between cyclical and structural unemployment. The natural rate of unemployment is the full employment and unemployment rate when aggregate output is at its potential level. Professor Larraín explains the impact of digitization on unemployment, and goes on to explain informal employment and the different types of underemployment, including time-related and skill-related underemployment.

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