What does 'discouraged workers' signify?

'Discouraged workers' refers to individuals who have stopped actively looking for work because they believe there are no jobs available for them. This situation often arises in times of economic downturn or stagnation when job vacancies are scarce and individuals feel disheartened about their job prospects. Although these individuals may want to work, their lack of engagement in the job search process categorizes them as discouraged.

This definition is essential in understanding labor market dynamics, as discouraged workers are not counted in the official unemployment rate, which can lead to an underestimation of the true level of joblessness in the economy. Recognizing discouraged workers helps economists gauge the overall health of the labor market and the effectiveness of policies aimed at rejuvenating employment opportunities.