Unemployment - AS Economics

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Unemployment occurs among those who do not have work but are actively seeking it.

Frictional unemployment occurs when it takes time for the labour market to match available jobs with those seeking work. For example, redundant workers, people joining the labour force for the first time.

Seasonal unemployment is a form of frictional unemployment and occurs when labour is not in demand during certain times of the year.

Structural unemployment arises from the long-term decline in certain domestic industries to more competitive foreign markets, or as labour is replaced by capital.

Cyclical unemployment arises due to a lack of aggregate demand.

The labour force refers to all of those of working age who are available to work, consisting of the employed and unemployed.

The size of the labour force is affected by natural population changes (such as birth and death rates and net migration), the school leaving age and the retirement age, age distribution of the population and cultural attitudes.

The labour force participation rate affects the size of the labour force.  If a high proportion of those of working age and ability…

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