1. FRICTIONAL UNEMPLOYMENT is when unemployment happens naturally. That is,
there are some people who quit their jobs because they do not like them, and some
people seek to re-enter the job market (like mothers after leaving a job to have
2. STRUCTURAL UNEMPLOYMENT occurs when the skills of the potential employee
no longer match the needs of potential employers. Technological changes may have
made an employee’s skills and talents obsolete.
3. SEAONAL UNEMPLOYMENT happens because some products/businesses are in
demand during only part of the year. The construction business and agriculture
harvesting are good examples. When business is not being conducted, the demand
for employees drops considerably.
4. CYCLICAL UNEMPLOYMENT is a result of the business cycles. There is a seemingly
natural cycle of good economic times and poor times. During these poor times of
recession or depression, businesses decrease their outputs, which requires fewer
employees, thus causing an increase in unemployment.
1. From a family perspective, what would be a negative effect of unemployment?
2. How does an increase in unemployment negatively affect our government?
3. When a business finds it necessary to lay off some employees (due to slowing
sales), what positive effects might this have for the business?
4. If an employee gets laid off, why might this present an opportunity to him/her?
5. For the following situations, identify the type of unemployment each represents.
a) As the winter season ends, skiing instructors lose their jobs.
b) Bill decided to move to Texas. He quit his present job and found a new job in
Texas three weeks later.
c) As interest rates continue to rise, the sale of new homes decreases. This has
caused an increase of unemployed construction workers.
d) Because of the decline in the U.S birth rate, baby clothes manufacturers are laying
off workers.
source: Karl Biedenweg (1999): Basic Economics (Social Studies Activity Book), Mark
Twain Media