Question

What is the difference between Cyclical, Frictional and Structural unemployment? If you were advising the government which would you consider to be of greatest concern(explain why)?

Answer 1

Cyclical unemployment is a factor of overall unemployment that relates to the regular ups and downs, or cyclical trends in growth and production, that occur within the business cycle. When business cycles are at their peak, cyclical unemployment will tend to be low because total economic output is being maximized.

Frictional unemployment is the unemployment that results from time spent between jobs when a worker is searching for a job or transitioning from one job to another. It is sometimes called search unemployment and can be based on the circumstances of the individual.

Structural unemployment is a form of unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers. Structural unemployment is often brought about by technological changes that make the job skills of many workers obsolete.

the greatest concern as a government should be structural unemployment. this is because there are jobs available but we cannot employ because of lack of certain skill set and education. thus it is government that should look after the needs and should make such technical or whatever skill set is needed to be available in their youth. the labor force should be well educated and well trained so as to fall in the skill set zone required by the jobs in the economy. government can easily do it by opening institutes and looking after the education industry of the economy. this will also help the economy grow and prosper and growth rate would shoot up with new skills and technology in the country