Types of unemployment

?

Cyclical

Cyclical unemployment, also called demand deficient unemployment, is when there is less demand for goods and services and so firms have to lay off workers. In terms of aggregate demand, this is when AD shifts to the left and output falls.

Image result for cyclical unemployment diagram (http://www.economicsonline.co.uk/Managing%20the%20macro-economy%20graphs/Unemployment-demand-deficient.png)

1 of 2

Structural and frictional

Structural unemployment is a form of unemployment caused by a skills gap. This is when the skills the workers can offer do not meet the requirements that employers demand. It often occurs when there are technological changes which mean that many workers are not needed by firms because their skills are worthless.

Frictional unemployment - The (usually) small period of time workers wait when moving between jobs. An example is somebody who has just come out of full-time education and waiting to start work.

Seasonal unemployment - When workers are unemployed for certain times of the year due to a lack of demand during that time. For example, a Santa Claus impersonator during the summer. 

Real wage inflexibility - When firms want to lower wages for workers but the workers do not want to work for less and so they either resign or the firm fires them and finds someone else who will work for less. 

2 of 2

Comments

No comments have yet been made

Similar Economics resources:

See all Economics resources »See all Unemployment resources »