4 types of unemployment

Written by carolyn gray
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4 types of unemployment
Economists classify unemployment four different ways. (Jupiterimages/BananaStock/Getty Images)

The main four types of unemployment are frictional unemployment, structural unemployment, seasonal unemployment and cyclical unemployment. Cyclical unemployment is the type of unemployment that causes widespread unemployment within a population. Seasonal and frictional unemployment are less prevalent forms of unemployment that are either voluntary or change depending on what type of year it is. Structural unemployment has to do with the supply and the demand of the number of individuals trained to perform a particular job.

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Frictional Unemployment

Finding a job takes time, and sometimes the reason a person is unemployed is because they are waiting to find a job that works for them or taking time to decide between multiple job offers. In addition, it takes time for employers to interview potential candidates and decide which individual they want to hire. Frictional unemployment is defined as voluntary unemployment because it results from the time needed to match job seekers to job openings, according to Econguru.com. One example of frictional unemployment is voluntarily quitting one job and taking time off to find another one.

Structural Unemployment

Structural unemployment is caused by a mismatch between the needs of employers and the skills that a workforce in a country has, according to Drexel University. For example, law schools in the United States train more lawyers than the country needs, which can make it difficult for a lawyer to get a job as a lawyer. As a result, a lawyer may be able to get a job working at a retail store, but he declines the job because it was not the field of work he was trained for. Structural unemployment can also be caused by geographical problems. For example, individuals who are willing to do construction work might live in a rural area, but the construction jobs are only available in urban areas.

Seasonal Unemployment

Seasonal unemployment is when a person is unemployed because certain types of jobs are only available at certain times of the year. For example, an individual who ploughs driveways might only have work in the winter, and a lifeguard might only have work in the summer when it's warm outside. Another example is that the demand for postmen usually rises around the holidays. Seasonal unemployment is simply caused by decreased demand for goods or services during particular times of the year. Seasonal unemployment is the most predictable type of unemployment because it happens each year.

Cyclical Unemployment

Cyclical unemployment is the type of unemployment that's caused by economic recessions and is the type of unemployment talked about frequently in the news. Cyclical unemployment is caused by negative economic growth. In other words, cyclical unemployment is when there is not enough demand to supply jobs for people within a country. This type of unemployment can result in widespread unemployment within a country.

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