Question

In: Economics

1. What is the difference between "cyclical unemployment" and "frictional unemployment"? Which are we generally referring...

1. What is the difference between "cyclical unemployment" and "frictional unemployment"? Which are we generally referring to when the phrase "unemployment" is used in the news, etc.?

2. Do you think technological advances will add to "structural unemployment" in the future? Why or why not?

Solutions

Expert Solution

1. Cyclical employment occurs due to the ups and downs in the business cycle of the economy while frictional unemployment occurs because of the time taken by the labourers to change to new jobs either because of change in technology or updating of skills of labourers. The type of unemployment usually reported in news is cyclical unemployment. For example, the newspaper will report increase in unemployment due to an economic downturn but not because of job transitions since the former captures the state of the economy better.

2. Structural unemployment occurs when the people fail to get jobs due to lack of employment opportunities because their skills are not in accordance with the kind of jobs available.  Technological advances will make the skills of former workers obsolete and they may be employed in the new economy only if their skills are adequately updated according to the economic trends. This will make many workers unemployed and this is structural unemployment. Therefore, technological advancement will lead to structural unemployment.


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