The Type Of Unemployment

Published Date: 23 Mar 2015 Last Modified: 21 Apr 2017

After the research, we found that there are four type of unemploment. And below is the summary of structural unemployment, frictional unemploment, cyclical unemployment, and classical unemploymeny.

Structural unemployment

When there are less suitable job provide for the people will cause to structural unemployment because there is a mismatch between the skills needed for the jobs and the skills of the unemployed workers. eg. A employee fired by his car maker company because machine had replace human in making car and the employee does not know how to operate the machine, so the employee only have the skills of make car and he have the difficulty in searching a new job.

Structural unemployment may also be effected by cyclical unemployment. If a nation's economy is suffers from a recession, that means many of the unemployed workers become discouraged, while their skills become rusty and outdated. This means that they(unemployed workers) may not suitable for the job vacancies that are reserved for them when the economy turns to normal. Some economists see this scenario "The implication is that sustained high demand may lower structural unemployment" under the speech from British Prime Minister Margaret Thatcher during the 1970s and 1980s. This theory has been referred to as an example of path dependence.

A lot of technological unemployment occurs, due to the replacement of workers by machines, we called as structural unemployment. Alternatively, technological unemployment refer to the way in which production increases by machine but fewer workers are needed to produce the same level of output every year. The fact that aggregate demand increase suggests that this problem is instead one of cyclical unemployment. As like we said before "Okun's Law", the demand side must grow quickly to absorb the growing labor force but also the workers made redundant by increased labor productivity.

Frictional unemployment

Frictional unemployment is the time period between jobs and unemployed workers when a worker is seeking for a better job and or a new environment. Frictional unemployment is always present in an economy no matter which country are u, so the level of unemployment is calculated by the unemployment rate minus the rate of frictional unemployment. This means that any changes in unemployment rate are normally represented in the simple statistics.

Frictional unemployment exists because both jobs and workers are multifarious, and a mismatch between the demand and supply. Such a mismatch can be related to skills, payment, work-time, location, attitude, and other factors. New entrants of employee such as graduated students and homemakers that want to return to the career can also include in frictional unemployment. Workers as well as employees accept a certain level of compromise or risk. Time and effort will be invest to find a better match but there is always a risk. This will increase the economy growth since it results in a better allocation of resources.

However, if the mismatches are taking too long finding a job or too frequent, the economy will suffers a decreasing, since some work will not get done. Therefore, governments should search for multiple ways to reduce unnecessary frictional unemployment happen too deep through planning nicely which means including providing education, advice, training, and assistance such as having some camp providing the more information about how to seeking job.

An increase or decrease in labor market frictions will shift the curve outwards or inwards. The frictions in the labor market sometimes will illustrated graphically with a Beverage curve, a downward-sloping, convex curve that shows a relationship between the unemployment rate and the vacancy rate. Changes in the demand or the supply for labor cause movements along the curve.

Cyclical unemployment

Cyclical unemployment, also known as deficient-demand unemployment, occurs whenever there is not enough aggregate demand in the economy to provide jobs for everyone who needs a job(People who seeking for job). Demand for most goods and services decreases will lead to less production and for sure fewer workers are needed when they are less product in the market, wages fall and fail to meet the equilibrium level, and mass unemployment results. Its name is derived from the frequent shifts in the business cycle although unemployment can also be persistent (during the Great Depression of the 1930s).

Besides, with cyclical unemployment occurs, the number of unemployed workers will increase and exceeds the number of job seekers, so that even with full employment and all open jobs were filled, they are still some workers will remain unemployed. These two friction "cyclical unemployment and frictional unemployment" happen because of the cyclical variables. For example, a surprise decrease in the money supply may shock the entire rational economic factors and will cause to restrain aggregate demand.

Summary

Structural unemployment - Where their skills becomes outdated.

(Example: Someone who do not use computer get fired because he do not know how to type in information into computer.)

Frictional unemployment - where people lose their jobs in order to look for better ones or still searching for job.

Cyclical unemployment - Unemployment occurs when there is a recession of economy in a nation.

The thing about unemployment is that the economy has to do with gross domestic product(GDP). We can produce more stuff with full employment. So if there are high unemployment, we should produce more but if we don’t produce as much stuff will cause to a bad economy.