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.
Cite specific examples to support your response.
Structural unemployment- example – laborers who worked on cotton fields
found their jobs obsolete with Eli Withney’s patenting of the cotton gin.
Another example, the invention of the computer made many jobs obsolete
such as the typing pool and the way bookkeepers were replaces by
computer programs.
Frictional Unemployment – example – a college student quitting their fastfood job to get a job that fits in the field they studied in college and
graduate in.
Cyclical Unemployment – example – due to a recession, many company
layoff workers and individuals loose their livelihood. There are more
individuals looking for work than there are job openings due to the
breakdown in the economy.
Seasonal Unemployment – example –Christmas time is when some stores
hire extra helpers for the busy season, then lay them off.
Economy Watch (2010), Unemploymnet types, retrieved January 9, 2012
from,
http://www.economywatch.com/unemployment/types/