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Different Types of Unemployment

Richard Pettinger

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1. Frictional Unemployment:

  • This is unemployment caused by people moving in between jobs, e. g. graduates or people changing jobs. There will always be some frictional unemployment.

  • Also high benefits may encourage people to stay on benefits rather than get work this is sometimes known as “voluntary unemployment”

    2. Structural Unemployment

    This occurs due to a mismatch of skills in the labour market it can be caused by: a) Occupational immobility’s. This refers to the difficulties in learning new skills applicable to a new industry, and technological change.

    b) geographical Immobility’s. This refers to the difficulty in moving regions to get a job.

    c) Technological Change. If there is the developments of labour saving technology in some industries there will be a fall in demand for labour.

    d) Structural change in the economy. The decline of the coal mines due to a lack of competitiveness meant that many coal miners were unemployed and they may find it more difficult to get jobs in new industries such as computers

    3. Classical or Real Wage Unemployment:

    This occurs when wages in a competitive labour market are pushed above the equilibrium. This is sometimes known as “disequilibrium” unemployment. Wages will also be sticky downwards. This could be caused by minimum wages, or trades unions

    4. Demand Deficient or “Cyclical Unemployment”

    This occurs when the economy is below full capacity. E. a recession when AD falls there will be a fall in output, therefore firms will employ less workers because they are producing less goods.

    5. Seasonal Unemployment

    Unemployment tends to be higher during certain times of the year, either in summer or winter depending on the country. The UK government actually produce a seasonally adjusted unemployment figure to take this into account.

    More: Macro Economics Essays

    Richard Pettinger studied Politics and Economics at Lady Margaret Hall, Oxford University. He now works as an economics teacher in Oxford. He enjoys writing essays on Economic and he edits a site - Economic Help and updates a blog on the UK economy

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