Classification of unemployment

Cyclical or demand deficient unemployment occurs when the economy is in need of low workforce. According to the Keynesian economists this type of unemployment occurs due to economic disequilibrium. This form of unemployment is most commonly known as cyclical unemployment since unemployment moves with the trade cycle. The demand for labor increases with the economy in the boom phase. Again, when the economy passes though recession, demand for labor contracts and the surplus is released as the unemployed labor force.

Frictional Unemployment occurs when a person is out of one job is searching for another. It generally requires some time before a person can get the next job. During this time he is frictionally unemployed. The problem of frictional unemployment is minimized with the development of efficient labor markets. The time period of shifting from one job to another is almost nil. However, imperfect information may aggravate the problem of frictional unemployment. The more developed an economy is, higher is the probability of getting a job faster and lower is the probability of frictional unemployment.

Structural unemployment occurs when job seekers' skill sets are not in demand because of geography or obsolescence. As industries die out in certain regions of the country or relocate to other regions, the workers may not be able to move with the job. This leaves workers with a skill set that is no longer in demand. These workers must either retrain or accept a lower-paying job in an industry that requires less skill.

Seasonal unemployment:Certain industries and trades engage workers for a particular season. When the season has ended the workers are rendered unemployed. Sugar industry is a typical example of this type of seasonal unemployment. Seasonal unemployment is most common in industries like tourism, hotel, catering and fruit picking.

Date: 2015-01-02; view: 990