Types of unemployment

In industrialized countries in which most people can earn a living only by

working for others, being unable to find a job is a serious problem. Because of its human

costs in deprivation and a feeling of rejection and personal failure, the extent of

unemployment is widely used as a measure of workers' welfare. The proportion of

workers unemployed also shows how well a nation's human resources are used and serves

as an index of economic activity. Economists have described the types of unemployment

as frictional, structural, and cyclical.

The first form of unemployment is Frictional unemployment. Frictional

unemployment arises because workers seeking jobs do not find them immediately. While

looking for work they are counted as unemployed. The amount of frictional

unemployment depends on the frequency with which workers change jobs and the time it

English: Abraham Lincoln, the sixteenth President ...

English: Beveridge curve of US economic data from ...

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takes to find new ones. Job changes occur often in the United States. A January 1983

survey showed that more than 25 percent of all workers had been with their current

employers one year or less. About a quarter of those unemployed at any particular time

are employed one month later. This means that a considerable degree of unemployment

in the United States is frictional and lasts only a short time. This type of unemployment

could be reduced somewhat by more efficient placement services. When workers are free

to quit their jobs, some frictional unemployment will always be present.

The second form of Unemployment is structural unemployment. Structural

unemployment arises from an imbalance between the kinds of workers wanted by

employers and the kinds of workers looking for jobs. The imbalances may be caused by

inadequacy in skills, location, or personal characteristics. Technological developments,

necessitate new skills in many industries, leaving those workers who have outdated skills

without a job. A...