Types of Unemployment

Student’s Name

Institution

Types of Unemployment

There are three main types of unemployment inexistence. They are frictional, structural and cyclical unemployment.

Structural Unemployment

Structural unemployment deals mismatch of workers and jobs as a result of insufficient skills or just the desire of an individual to work in the wrong field. Structural unemployment relies heavily on the dynamic changes in an economy and the social needs of the same economy. For example, technological advances and dynamic market trends usually make several skills obsolete, leading to an exponential increase in the number of unemployed persons. A practical example is when laborers who were previously working in cotton fields were rendered jobless when Eli Whitney patented the cotton gin. Similarly, as the number of computers in use rises over the years, several jobs that were previously done in manual books are steadily being replaced by highly efficient and reliable computer software.

Frictional Unemployment

This kind of unemployment is usually present in any economy and it results from momentary transitions that are made by employers and workers or from employers and workers who have incomplete or inconsistent information. There is close relationship between frictional unemployment and structural e unemployment since both of them rely on dynamism of the economy. It is mainly caused by many unemployed workers who fail to take the first job offer given to them due to wages being offered and the necessary skills. In addition, it can also be caused by employers who quit their jobs in order to relocate to another part of the county. “Frictional unemployment is portrayed as a transaction cost of attempting to get a new job; a result of insufficient and unreliable information given on the available jobs.” (Bernal –Verdugo, Furceri & Guillaume, 2012).Cyclical Unemployment

This is the kind of unemployment that results from economic contraction. The economy usually has the capability to come up with jobs which eventually results in the overall economic growth of a country. Therefore, a progressing economy always exhibit lower unemployment levels. On the contrary, based on cyclical unemployment, any economy that is on recession is likely to face high levels of unemployment. Whenever this happens, the number of unemployed workers increases more than the available job openings as a result of the breakdown of the economy. “Cyclical unemployment is greatly concentrated on an economy’s activity.”(McConnell, Brue, Flynn & Barbiero, 2010).

References

McConnell, C. R., Brue, S. L., Flynn, S. M., & Barbiero, T. P. (2010). Macroeconomics. McGraw-Hill Ryerson.Bernal-Verdugo, L. E., Furceri, D., & Guillaume, D. (2012). Labor market flexibility and unemployment: new empirical evidence of static and dynamic effects. Comparative Economic Studies, 54(2), 251-273.