Categories of Unemployment


There are four types of unemployment: frictional, structural, cyclical, and seasonal. Each type has a different effect on the economy.

Frictional unemployment refers to those people who have quit work because they didn’t like the job, the boss, or working conditions and who have not yet found a new job. It also refers to those people who are entering the labor force for the first time ( for example new graduates) or are returning to the labor force.

There will always be some frictional unemployment, because it takes some time to find a new job or a first job. Frictional unemployment has littl negative effect on the economy. A large number of the nemployed are getting their first job or are simply between jobs.

There is a second important group called the structurally unemployed. Structural unemployment refers to that unemployment caused by the restructuring of firms or by a mismatch between the skills (or location) of job seekers nd the requirements (or location) of available jobs, for example, coal miners in an area where the mines have been closed. You have learned that a major cause of this type of unemployment is the decline of the manufacturing sector. Another cause is the replacement of workers by robots and other technology. Structural unemployment calls for industry retraining programs to move workers into growth industries.

A third kind of unemployment is cyclical unemployment. It occurs because of a recession or a similar downturn in the business cycle. This type of unemployment lasts until the economy recovers and businesses begin rehiring.

The fourth type of unemployment is seasonal unemployment. It occurs where the demand for labor varies over the year, as with the harvesting of crops.




-Understanding Business - William G. Nickels, James M. McHugh, Susan M.McHugh


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