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UNEMPLOYMENT PT 2 Types of Unemployment

The document discusses different types of unemployment including structural, cyclical, frictional, seasonal, and real wage unemployment. Structural unemployment is due to a mismatch between worker skills and job requirements. Cyclical unemployment results from economic fluctuations. Frictional unemployment is temporary as workers transition between jobs. Seasonal unemployment is due to seasonal consumer demand changes. Real wage unemployment occurs when trade unions raise wages above market equilibrium levels.

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Ashmita Mahadeosingh
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133 views16 pages

UNEMPLOYMENT PT 2 Types of Unemployment

The document discusses different types of unemployment including structural, cyclical, frictional, seasonal, and real wage unemployment. Structural unemployment is due to a mismatch between worker skills and job requirements. Cyclical unemployment results from economic fluctuations. Frictional unemployment is temporary as workers transition between jobs. Seasonal unemployment is due to seasonal consumer demand changes. Real wage unemployment occurs when trade unions raise wages above market equilibrium levels.

Uploaded by

Ashmita Mahadeosingh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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UNEMPLOYMENT pt.

2-
Different types of Unemployment
TYPES OF UNEMPLOYMENT

? The different types of unemployment in an economy are:


1) Structural
2) Cyclical
3) Frictional
4) Seasonal
5) Real Wage
1) STRUCTURAL UNEMPLOYMENT

? This occurs where there is a mismatch between the skills required to perform a job and the
skills possessed by workers Eg) a shift from primary production to manufacturing resulting
in unemployment in an economy
? Unemployment results when new industries do not create enough jobs to employ those
made redundant in the declining industry
? Therefore, there is a mismatch between the jobs available and the skill levels of the
unemployed.
? This could be the result of structural changes in an economy where the industrial
composition changes.
2) CYCLICAL UNEMPLOYMENT

? Cyclical unemployment results from the trade cycle or fluctuations in the economy.
? Therefore as economic activity fluctuate, so too does the level of cyclical employment
? This type of unemployment is also called demand-deficient unemployment
? Cyclical unemployment is a type of unemployment where labor forces are reduced as a
result of business cycles or fluctuations in the economy, such as recessions (periods of
economic decline).
? When the economy is at its peak or has continuous growth, the rate of cyclical
unemployment is low, because during this period of production, sales and income increase,
therefore, more people are needed to meet the demand.
? On the other hand, during a recession, the rate of cyclical or involuntary unemployment is
high, due to the decline in consumer demand for goods and services. In other words, there
is a decrease in production – therefore, fewer workers are needed, resulting in job layoffs.
3) FRICTIONAL UNEMPLOYMENT

? This type of unemployment is short term associated with the normal working of the labour
market
? It occurs as a result of voluntary employment transitions within an economy.
? Workers choosing to leave their jobs in search of new ones and workers entering the
workforce for the first time constitute frictional unemployment.
? The period of time such persons take to find a new job or to find a satisfactory job
constitute frictional unemployment
4) SEASONAL UNEMPLOYMENT

? Unemployment that arise due to seasonal pattern in consumer demand in various markets
and thus low demand cause production decline resulting in unemployment
? Seasonal unemployment occurs when people are unemployed at particular times of the year
when demand for labour is lower than usual.
? Some workers may have jobs at certain times of the year and for the rest of the year remain
unemployed. eg) tourism, agriculture, Carnival
REAL WAGE UNEMPLOYMENT

? This unemployment occurs when trade unions succeed in raising the wage rate above the
equilibrium level
? At a wage rate above the equilibrium level, supply exceeds the demand for labour and the
surplus labour is unemployed
? The situation leads to real wage unemployment of Y-X
? This is why economists argue that trade unions can cause inefficiency and unemployment
? So trade unions can push wages above the equilibrium wage rate but the rise in real wages
above the equilibrium
Assignment

? 2017 5b,c

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