The main causes of unemployment

REAL WAGE UNEMPLOYMENT

• form of dis-equilibrium unemployment that ocurs when real wages for jobs are forced above the market clearing level
• traditionally trade unions & wage councils are seen as the instituions causing this type of unemplyment e..g. demanding higher wages

DEMAND DEFICIENT UNEMPLOYMENT

• associated with an economic recession or a sharp economic slowdown
• occurs due to a fall in the level of national output in the economy causing firms to lay off workers to reduce costs & protect profits
• labour is derived demand thus this is the process of labour shedding
• can also occur when economy is constantly  running below capacity

FRICTIONAL…