Ahmad
Ahmad
Ahmad
Interestingly, people who have not looked for a job in the past four weeks
but have been actively seeking one in the last 12 months are put into a category
called the “marginally attached to the labor force.” Within this category is another
category called “discouraged workers,” which refers to people who have given up
looking for a job.
What Is Unemployment?
Types of Unemployment
There are basically four types of unemployment: (1) demand deficient, (2)
frictional, (3) structural, and (4) voluntary unemployment.
2. Frictional unemployment
Structural unemployment happens when the skills set of a worker does not match
the skills demanded by the jobs available, or alternatively when workers are
available but are unable to reach the geographical location of the jobs.
An example is a teaching job that requires relocation to China, but the worker
cannot secure a work visa due to certain visa restrictions. It can also happen when
there is a technological change in the organization, such as workflow automation
that displaces the need for human labor.
4. Voluntary unemployment
Causes of Unemployment
Unemployment is caused by various reasons that come from both the demand side,
or employer, and the supply side, or the worker. Demand-side reductions may be
caused by high interest rates, global recession, and financial crisis. From the supply
side, frictional unemployment and structural employment play a great role.
Effects of Unemployment
The impact of unemployment can be felt by both the workers and the national
economy and can cause a ripple effect. Unemployment causes workers to suffer
financial hardship that impacts families, relationships, and communities. When it
happens, consumer spending, which is one of an economy’s key drivers of growth,
goes down, leading to a recession or even a depression when left unaddressed.
Reference
https://corporatefinanceinstitute.com/resources/economics/unemployment/
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