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Types of Unemployment

The causes of unemployment can be categorized into three distinct groups:

Structural Unemployment

Structural unemployment arises from a discrepancy between job requirements and available skills within the economy.

  • This mismatch typically emerges as the economic structure evolves, such as the decline of the secondary sector and the expansion of the tertiary sector.
  • Jobs requiring specific skills may become obsolete, as seen with shipbuilding in Glasgow.
  • For instance, many Western industries relocating production to China have contributed to structural unemployment in their economies.
  • Without assistance for retraining, affected workers often face unemployment or underemployment.

Cyclical Unemployment

Cyclical unemployment stems from a decrease in total (aggregate) demand within an economy.

  • This commonly occurs during economic slowdowns or recessions.
  • At least one component of real Gross Domestic Product (rGDP) experiences a decline, be it consumption, investment, government spending, or net exports.
  • The demand for labor is derived from the demand for goods and services.
  • Consequently, as economic output diminishes, firms often resort to laying off workers.

Frictional Unemployment

Frictional unemployment arises when individuals are transitioning between jobs.

  • This form of unemployment is typically temporary.
  • Workers voluntarily leave their previous employment to seek new opportunities.

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FAQs on Types of Unemployment - Economics for GCSE/IGCSE - Year 11

1. What are the different types of unemployment?
Ans. The different types of unemployment include frictional unemployment, structural unemployment, cyclical unemployment, and seasonal unemployment.
2. What is frictional unemployment?
Ans. Frictional unemployment occurs when individuals are temporarily between jobs as they search for new employment opportunities.
3. Can you explain structural unemployment?
Ans. Structural unemployment is caused by shifts in the economy, such as changes in technology or the decline of certain industries, leading to a mismatch between the skills of workers and the requirements of available jobs.
4. What is cyclical unemployment?
Ans. Cyclical unemployment is a type of unemployment that occurs due to fluctuations in the business cycle, with high unemployment during economic downturns and low unemployment during economic expansions.
5. How does seasonal unemployment differ from other types of unemployment?
Ans. Seasonal unemployment is related to seasonal fluctuations in demand for certain goods or services, leading to temporary unemployment for workers in industries such as agriculture or tourism during off-peak seasons.
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