Brief Definition of Unemployment Types

Unemployment rate is measured by dividing the number of unemployed people with the total number of labor force. Unemployed people, by economic definition, are those who have no jobs for the last four weeks but are actively seeking for jobs and available for work. The labor force includes the employed people (those who currently have jobs) and the unemployed. The Bureau of Labor Statistics under the Department of Labor conducts surveys every month to measure this rate. Outcomes of the surveys are being released every first Friday of the month, thus the monthly update of this subject matter we see on news channels. Economists classify unemployment to three types. Here are the brief definitions of each unemployment type.

1.    Frictional Unemployment. It exists when some sort of lacking information prevents employers and jobseekers to meet each other. This may occur when employers refrain from hiring new people thinking that there are no enough qualified individuals for a particular job as a result of not looking much further; or when a jobseeker is temporarily holding out for a job which may be made available in the future.

2.    Structural Unemployment. This occurs when rapid changes in technology and the market as a whole make human workforce unnecessary. Computers and machines took the place of people working in manufacturing plants for example, encouraging people to learn basic computer skills to make them adaptable in the use of computers to enable certain equipments and machineries to function.

3.    Cyclical Unemployment. When there is a general downturn in business activities and most businesses cannot provide labor to those seeking for jobs as a result of the employers’ lack of spending and earning power, cyclical unemployment happens. This is the most common unemployment type indicative of a country that is suffering from a falling economic output.

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