Explain the Different Types of Unemployment

Task 3 - Explain the different types of unemployment.

There are three types of unemployment. They are frictional, cyclical and structural. Each type of unemployment represents stages of unemployment which people who are unemployed are currently in.

Structural unemployment is an unemployment that comes from there being a lack of demand for the workers that are available. The two main reasons that cause a lack of demand for workers in a certain industry. The first one is changes in technology. For example, personal computers replaced typewriters then typewriter factories had to shut down. The workers from the typewriter factories become unemployed and have to find other industries to be employed in. The second one is changes in tastes, if bagpipes become unpopular, bagpipe companies will go bankrupt and their workers will be unemployed. Seasonal unemployment is unemployment due to changes in the season throughout the year, such as a lack of demand for mall Santa Clauses in January. Seasonal unemployment is a form of structural unemployment, as the structure of the economy changes from month to month.

Frictional unemployment is unemployment that comes from people moving between jobs, careers, and locations. The basis of frictional unemployment includes the following. People entering the workforce from school, re-entering the workforce after raising children, changing employers due to quitting or being fired (for reasons besides structural ones), People changing careers due to changing interests, moving to a new city (for non-structural reasons) and being unemployed when they arrive.

Cyclical unemployment happens when the unemployment rate moves in the opposite direction as the GDP growth rate. So when GDP growth is small or negative unemployment is high. Getting laid off due to a recession is the classic case of cyclical unemployment. This is why the unemployment rate is a key economic indicator.