Question

QUESTION FOUR [15]
Economists classify unemployment according to various categories. List and describe three
main types of unemployment.

Answer 1

Answer : Three main types of unemployment are :

(I)  Cyclical Unemployment : Cyclical unemployment fluctuate by the business cycle. When the economy is in downturn of business cycle then the demand for workers fall which create the unemployment in the economy. This unemployment become vanish when the economy is in upturn of business cycle. The unemployment which fluctuate by the business cycle is known as cyclical unemployment.

(II) Structural Unemployment : Structural unemployment occur due to mismatch in job. This means that when mismatch exist between employer's want and employee's skill then unemployment occur. This unemployment is called structural unemployment.

(III) Frictional Unemployment : Frictional unemployment occur when people switch from one job to another job. This means that when people quit current job and searching for new job to get better position and facilities then at that new job searching period peoples become unemployed. This unemployment is known as frictional unemployment.