There are various debates on measuring rate of unemployment

Economics
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What are the different types of unemployment and how are they related to the condition of the economy during a given period?

Jul 9th, 2015

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Cyclical Unemployment

Over time, the economy experiences many ups and downs. That's what we callcyclical unemploymentbecause it goes in cycles. Cyclical unemployment occurs because of these cycles. When the economy enters a recession, many of the jobs lost are considered cyclical unemployment.

For example, during the Great Depression, the unemployment rate surged as high as 25%. That means one out of four people were willing and able to work, but could not find work! Most of this unemployment was considered cyclical unemployment. Eventually, unemployment came down again. As you can see, at least part of unemployment can be explained by looking at the cycles, or the ups and downs of the economy.

Frictional Unemployment

Frictional unemploymentoccurs because of the normal turnover in the labor market and the time it takes for workers to find new jobs. Throughout the course of the year in the labor market, some workers change jobs. When they do, it takes time to match up potential employees with new employers. Even if there are enough workers to satisfy every job opening, it takes time for workers to learn about these new job opportunities, and for them to be considered, interviewed and hired.

When Cindy graduates from college, she begins looking for work. Let's say it takes her four months to land a new job. During this time, she is frictionally unemployed.

Structural Unemployment

Let's talk aboutstructural unemploymentoccurs because of an absence of demand for a certain type of worker. This typically happens when there are mismatches between the skills employers want and the skills workers have. Major advances in technology, as well as finding lower costs of labor overseas, lead to this type of unemployment.

Cyclical Unemployment

Over time, the economy experiences many ups and downs. That's what we callcyclical unemploymentbecause it goes in cycles. Cyclical unemployment occurs because of these cycles. When the economy enters a recession, many of the jobs lost are considered cyclical unemployment.

For example, during the Great Depression, the unemployment rate surged as high as 25%. That means one out of four people were willing and able to work, but could not find work! Most of this unemployment was considered cyclical unemployment. Eventually, unemployment came down again. As you can see, at least part of unemployment can be explained by looking at the cycles, or the ups and downs of the economy.


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Jul 9th, 2015

Thank you, as you listed Cyclical 2x's.  What are your references?

Jul 9th, 2015

Wagner, Barbara. "Types of Unemployment." Montana Department Of Labour And Industry, Research And Analysis Bureau (2014).

Thirlwall, Anthony Philip. "TYPES OF UNEMPLOYMENT: WITH SPECIAL REFERENCE TO ‘NON DEMAND‐EFICIENT’UNEMPLOYMENT IN GREAT BRITAIN1." Scottish Journal of Political Economy 16.3 (1969): 20-49.

Jul 9th, 2015

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