Question

15. What is Frictional Unemployment? What causes it? (Discuss job search, match of
workers skills and benefits, sectoral shifts, unemployment insurance)

16. What is a structural unemployment? What causes it? (Discuss minimum wage laws,
unions, efficiency wages)

Answer 1

15. Frictional unemployment is a form of unemployment that occurs when employees seek new jobs or move from one job to the next. This is part of normal unemployment, and is still present even though the economy is perceived to be in full employment. Like other forms of unemployment, during an economic crisis, frictional unemployment doesn't increase. On the opposite, it appears to decrease during a recession as employees are becoming more concerned about job security because there are less employment prospects available on the market.

When there is a disparity in the economy between job-seekers and available jobs, there is known to be frictional unemployment. The issue can affect the job market particularly for new entrants or re-entrants. It is usually due to an employee's natural career development, and their natural transfer to a new work, business, or position. Workers ' uncertainty about jobs, benefits, employment, job obligations, etc. may cause them to leave their current job and look for something that meets their updated expectations better.

16. Structural unemployment is triggered by a skills disparity between the unemployed and the work available. Structural unemployed are triggered by structural changes, such as deindustrialisation, which leaves some unemployed workers unable to find jobs in new industries of varying skill requirements. Also during times of high economic growth chronic unemployment persists. It is a form of aggregate demand (AD) and not inadequate supply-side unemployment. Structural unemployment mitigation programs include retraining and national subsidies. Fiscal or monetary policy to raise AD in the resolution of systemic unemployment would be unsuccessful.

Geographical real estate–This happens when people can not shift from places with high unemployment to regions where there is a shortage with labour. This could be due to the difficulty of buying / renting a home. It may also be because of family ties to their present location. Occupational Real Estate. This occurs amid shifts in the economy, leading to changing demand for skilled labour. For example, if manufacturing plants are closed, employees with skills for these types of jobs may struggle to migrate to new industries where very different skills are needed