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In: Economics

How to distinguish between frictional, structural, and cyclical unemployment? Why is unemployment an economic problem? What...

How to distinguish between frictional, structural, and cyclical unemployment? Why is unemployment an economic problem? What are the social effects of unemployment?

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Expert Solution

Frictional unemployment refer to search unemployment. Friction unemployment is occur when a person is in search of new job. Frictional unemployment occurs because of normal turnover in labour market. In simple terms we can define that when one person is unemloyed for sometime in search of new job that time period is known as frictional unemployment.

Where as  Structural unemployment is occurs due to shift in an economy. Structural unemployment refers mismatch between the job available and the skill level of unemloyed.

Cyclical unemployement occurs due to recession. Cyclical unemployment is generally occurs because of rise and fall in economy. It related to business cycle in an industry. It's seen that cyclical unemployment are often temporary phenomenon. During cyclical unemployment there is economic slowdown or growth rate is negative.

Unemployment an economic problem:- The unemployment is big problem for any country. It badly effect the country's economic growth. It generally consider that high level of unemployment shows that economy is performing below it's potential. Due to unemployment labours have to accept low wages. There is industrial dispute as well due to unemployment the manpower and human resources are going waste. There is loss in the output because of unemployment.

Social effect of unemployment:- The social effect of unemployment are many like financial problem , poverty, and debt. The unemployment effect the quality of life which leads to family tension. If the unemployment rate is high than there will be highly inequality between income and wealth. Unemployment leads to vicious circle in society by causing problem. The unemployment leads to illiteracy in the society.

So, it is very important for the government to take strong and better decisions to remove unemployment from thier country as much as possible. Otherwise it will effect the economic growth as well as it leads to many social problems.


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