1.6.5.2 Types of Unemployment
Completion requirements
There are three types of unemployment:
Frictional unemployment occurs between the end of one job, and the beginning of a new job (such as between finishing one construction job and beginning another, or in the case of seasonal workers). Frictional unemployment is normal. This category can't be reduced to zero. An unemployment rate no greater than the frictional unemployment rate is considered to be full employment.
Cyclical unemployment occurs when the demand for workers declines - like farm labourers being laid off in the fall once harvest is complete.
Governments may institute policies to promote economic growth and reduce cyclical unemployment. For example, when a government institutes a policy designed to shorten hospital wait times, and makes available the money to do so, hospitals hire more staff, and the unemployment rate decreases.
Governments may reduce taxes to promote economic growth and reduce cyclical unemployment. When people have more money, they spend more money. That tends to create jobs.
- Frictional
- Cyclical
- Structural
Frictional unemployment occurs between the end of one job, and the beginning of a new job (such as between finishing one construction job and beginning another, or in the case of seasonal workers). Frictional unemployment is normal. This category can't be reduced to zero. An unemployment rate no greater than the frictional unemployment rate is considered to be full employment.
Frictional Unemployment
Frictional
Unemployment
Cyclical unemployment occurs when the demand for workers declines - like farm labourers being laid off in the fall once harvest is complete.
Governments may institute policies to promote economic growth and reduce cyclical unemployment. For example, when a government institutes a policy designed to shorten hospital wait times, and makes available the money to do so, hospitals hire more staff, and the unemployment rate decreases.
Governments may reduce taxes to promote economic growth and reduce cyclical unemployment. When people have more money, they spend more money. That tends to create jobs.
Structural unemployment occurs when workers have skills that are no longer in demand. Workers with dated skills lose their jobs during periods of economic growth driven by technological advances. For example, workers with shorthand skills were in
less demand after the tape recorder was available.
Typically, governments address structural unemployment through worker re-training programs; employers address structural unemployment by encouraging workers to work outside their areas of expertise; and, employees address structural unemployment by relocating to areas where jobs requiring their skills are available.
Typically, governments address structural unemployment through worker re-training programs; employers address structural unemployment by encouraging workers to work outside their areas of expertise; and, employees address structural unemployment by relocating to areas where jobs requiring their skills are available.
Think about this...
Between Grade 11 and Grade 12, you take a summer job as a camp counsellor. At the end of August, the job ends. What type of unemployment is this?
In Canada, you are not considered unemployed unless you are actively seeking work. If you've returned to school and are not actively seeking work, you are not considered unemployed.