Question

Please Explain and Discuss with examples Cyclical, Frictional and Structural Unemployment.

Answer 1

The unemployment which results from the economic ups and downs is known as cyclical unemployment. It is related to the macroeconomic situation. Cyclical unemployment will usually rise at the time off recession and reduces in the situation where the economy starts recovering. The financial crisis faced by US economy in 2008 is an best example of cyclical unemployment. At the time off recession many people lost their jobs but later when the economy start growing people got job opportunities.

Frictional unemployment occurs due to voluntary employment transitions that takes place within the economy. This type of unemployment arises due to the time delay in searching for new jobs. It is not related with the business cycles. An individual leaves a job in search of another is an example of frictional unemployment. Here the individual remains jobless because of his personal decision.

Structural unemployment takes place due to the shifts in the economy. It is long lasting compared to other types of unemployment. The mismatch between the needs of companies and what workers offer is the main reason for structural unemployment. The unemployment faced by the farmers in emerging market economies is an example of structural unemployment. The job opportunities are available to technically skilled workers. So that the farmers are loose their jobs. It is a best example of structural unemployment.