Question

Briefly explain each category of unemployment. There are three categories.

Answer 1

Unemployment is a basically a macro economics aspect which tell us that how many citizens are actually working out of number of individuals who are eligible for work . So higher unemployment leads to recession in the economicy . In basic sense , there are three categories of unemployment -

Frictional unemployment - This is a type of unemployment which basically exist in the economy everytime for particluar moment . This is a basically a unemployment in which individual is unemployment for a few days or for particular shorter time period when he/she is changing his/her job from one place to other . In this case the amount of time spent in transition from the current to the next job, even if it's an hour the individual is considered to be unemployed. Frictional unemployment is beneficial for the economy because many workers are moving from low-paying and low-productivity jobs to higher-paying and higher-productivity jobs.

Structural Unemployment: This unemployment arise as a result of mismatch between the job skills of workers and the requirement of jobs. Shifting patterns in the demand for various commodities of industries is also responsible for structural unemployment. Structural unemployment tends to last for longer periods because workers need time to learn and acquire the new skill.

Cyclical Unemployment : This exist as a result of cyclical fluctuations in the economy. When the economy moves into recession, many industries find their sales falling and as a result cut down their production, as production falls they start laying off workers. This type of unemployment rises and falls with the business cycle. If the economy is good, people have jobs. If the economy is bad, people lose those jobs.