Claim: Oversupply and insufficient demand are the two crucial factors for underemployment equilibrium, it happens when the labor force is overeducated for the existing employment opportunities in the economy and when there is insufficient demand for the labor force.
Evidence: Many factors contribute to the existence of undesirable equilibriums, among which two are crucial for underemployment equilibrium: oversupply and insufficient demand. When the labor force are overeducated for the skill level of available employment opportunities in the economy, an underemployment equilibrium will occur. Insufficient demand addresses the same issue at the macro level.