The Labour Market: Workers, Wages, and Unemployment - Types of Unemployment

6 important questions on The Labour Market: Workers, Wages, and Unemployment - Types of Unemployment

What is frictional unemployment?

It refers to individuals transitioning between jobs or entering the workforce for the first time. Short term and voluntary, it is seen as part of a healthy labor market. Example: A university graduate seeking their first position.

What describes cyclical unemployment?

This type of unemployment occurs due to economic downturns, leading to job losses when demand diminishes. Often short term, it contributes to real GDP decline, notably during recessions.

What is structural unemployment?

A long-term issue arises from a mismatch between workers’ skills and job market requirements. Caused by economic changes, it requires retraining or upskilling for affected workers. Example: Loss of U.S. manufacturing jobs.
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What is frictional unemployment?

This type occurs when individuals transition between jobs or enter the workforce.

What triggers cyclical unemployment?

This arises from economic downturns, impacting demand for goods and services.

What causes structural unemployment?

It results from a skills mismatch, often due to economic changes or industry decline.

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