What are the different types of unemployment? How do they affect the economy in terms of growth, labor force, and price of labor? Cite specific examples to support your response.
What are the different types of unemployment?
There are four types of unemployment:
Structural unemployment – depends on the social needs of the economy and dynamic changes in the economy.
Frictional Unemployment – caused because unemployed workers may not always take the first job they are offered because of wages and the necessary skills needed.
Cyclical Unemployment – an economy has the capacity to create jobs which increases economic growth. An expanding economy usually has lower levels of unemployment.
Seasonal Unemployment – there are certain types of unemployment that tends to concentrate in a particular time of the year and this is known as seasonal unemployment.
How do they affect the economy in terms of growth, labor force, and price of labor?
Structural unemployment-. Example; advances in technology and changes in market conditions often turn many skills obsolete, this typically increases the unemployment rate.
Frictional Unemployment – this type of unemployment can also be caused by failing firms, poor job performance, or obsolete job skills. Usually someone out of work, it takes time to find future employment, the time spent out of work is frictional unemployment.
Cyclical Unemployment – an economy that is in a recession faces higher levels of unemployment.
Seasonal Unemployment – is most common in industries such as tourism, hotel, catering and fruit picking.
Any type of unemployment is important to the labor force and economic growth. A person who is actively searching work, but unable to find work is classified as unemployed. The size of the labor force is used to determine the unemployment rate...