In: Economics
Cyclical Unemployment:
It is the unemployment caused by the upswings and downswings of
business cycles in the economy.
During an upswing (expansionary phase of a business cycle)
unemployment goes down
During a downswing (contractionary phase of a business cycle)
unemployment goes up.
This kind of unemployment, which fluctuates with business cycles is
called cyclical unemployment.
Examples:
1) Selena lost her job as an architect during the recession as
businesses cut back on their spending ( job loss due to contraction
or recession in the business cycle).
2) Another example of cyclical unemployment was the large layoffs
created in construction, real estate, and mortgage around 2007.
Frictional Unemployment:
It is unemployment between jobs.
It is also unemployment in the interim period between my graduating
from school and finding the best fitting job for me.
It is unemployment caused by labor mobility.
Examples:
People move from place to place, or from job to job.
In between these movements, they generally have some time
off.
They are frictional unemployed, in those interim periods.
Henri has recently moved from New York to Birmingham and is looking
for a job (in between jobs).
The job search period, trying to find the best fit for
themselves.
Structural Unemployment:
It is unemployment due to lack of skills demanded by the market
place.
Example:
Warren lost his job as a cashier due to the creation and use of
self check out counters (job skills mismatch or replaced by
technology).
Additional Information (Optional):
Structural unemployment is the worst kind of unemployment to get
rid of. This kind of unemployment is mostly seen when the economy
is surging in terms of rapid technological changes.