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necessitate new skills in many industries, leaving those workers who have outdated skills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