8/12/2019 6.Unemployment

1/8

Unemployment

8/12/2019 6.Unemployment

2/8

Types of Unemployment

Frictional Unemployment:

Unemployment caused

when people move from job to job

and claim benefit in the meantime

The quality of the information available for job

seekers is crucial to the extent of the

seriousnessof frictional unemployment

8/12/2019 6.Unemployment

3/8

Types of Unemployment

Structural Unemployment:

Unemployment causedas a result of the decline ofindustries and the inability of

former employees to moveinto jobs being createdin new industries

As the coal industry declined, many miners had difficultiesutilising their skills to find work in new industries such as ITand service sector work. An example of structural changein the economy leading to unemployment.

Title: On Duty. Copyright: Getty Images,available from Education Image Gallery

8/12/2019 6.Unemployment

4/8

Types of Unemployment

SeasonalUnemployment:

Unemployment causedbecause of theseasonal nature ofemploymenttourism,skiing, cricketers,beach lifeguards, etc.

The demand for lifeguard services tends toexist in the summer but nothing like as much inthe winter an example of seasonalunemployment.

Copyright: Swiassmautz, http://www.sxc.hu

8/12/2019 6.Unemployment

5/8

Types of Unemployment

Demand Deficient:

Caused by a general lack ofdemand in the economythis type

of unemploymentmay be widespread acrossa rangeof industries and sectors

Keynes saw unemploymentas primarily a lack ofdemand in the economy

which could be influencedby the government

A fall in aggregate demand can lead to a decline inspending forcing businesses across the economy intoclosing with damaging effects on employment as aresult.

Copyright: Beeline, http://www.sxc.hu

8/12/2019 6.Unemployment

6/8

Types of Unemployment

Technological

Unemployment:

Unemployment caused

when developments intechnology replace

human efforte.g in

manufacturing,

administration etc.

Look: No workers! Robots rule where humans once stood!

Titles: Assembly Line Workers, Electronic Factory. Copyright: Getty Images, available from EducationImage Gallery

8/12/2019 6.Unemployment

7/8

Unemployment

Short run and long run unemployment:

Classical theoryshort run unemployment is a

temporary phenomenon; wages will fall

and the labour market will move back intoequilibrium

Long rununemployment

will be voluntary

8/12/2019 6.Unemployment

8/8

Unemployment

Keynesian Unemployment:

Unemployment in the long run

may remain stubbornly high

because of imperfections in the

marketsticky wages

Widespread unemployment in some parts of the UK during the 1930s seemed to contradict theassumptions made by classical economists. Post 1945, Keynesian demand managementput full employment through government intervention in the economy as a policy priority.

Title: Poverty in Wigan. Copyright Getty Images, available from Education Image Gallery