Unemployment
Types of Unemployment
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Frictional Unemployment:
Unemployment caused
when people move from job to job
and claim benefit in the meantime
The quality of the information available for job
seekers is crucial to the extent of the
seriousness
of frictional unemployment
Types of Unemployment
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Structural Unemployment:
Unemployment caused
as a result of the decline of
industries and the inability of
former employees to move
into jobs being created
in new industries
As the coal industry declined, many miners had difficulties
utilising their skills to find work in new industries such as IT
and service sector work. An example of structural change
in the economy leading to unemployment.
Title: On Duty. Copyright: Getty Images,
available from Education Image Gallery
Types of Unemployment
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The demand for lifeguard services tends to
exist in the summer but nothing like as much in
the winter – an example of seasonal
unemployment.
Copyright: Swiassmautz, http://www.sxc.hu
Seasonal
Unemployment:
Unemployment caused
because of the
seasonal nature of
employment – tourism,
skiing, cricketers,
beach lifeguards, etc.
Types of Unemployment
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A fall in aggregate demand can lead to a decline in
spending forcing businesses across the economy into
closing with damaging effects on employment as a
result.
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Demand Deficient:
Caused by a general lack of
demand in the economy –
this type
of unemployment
may be widespread across
a range
of industries and sectors
Keynes saw unemployment
as primarily a lack of
demand in the economy
which could be influenced
by the government
Types of Unemployment
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Technological
Unemployment:
Unemployment caused
when developments in
technology replace
human effort – e.g in
manufacturing,
administration etc.
Look: No workers! Robots rule where humans once stood!
Titles: Assembly Line Workers, Electronic Factory. Copyright: Getty Images, available from Education
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Unemployment
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Short run and long run unemployment:
Classical theory – short run unemployment is a
temporary phenomenon; wages will fall
and the labour market will move back into
equilibrium
Long run – unemployment
will be ‘voluntary’
Unemployment
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Keynesian Unemployment:
Unemployment in the long run
may remain stubbornly high
because of imperfections in the
market – ‘sticky wages’
Widespread unemployment in some parts of the UK during the 1930s seemed to contradict the
assumptions made by classical economists. Post 1945, Keynesian demand management
put full employment through government intervention in the economy as a policy priority.
Title: Poverty in Wigan. Copyright Getty Images, available from Education Image Gallery