MacroeconomicsI_working_version (1)

84
Chapter 8
8.4.3. Types of Unemployment
Let’s introduce three types of unemployment: frictional, structural, and cyclical.
8.4.3.1. Frictional Unemployment
Frictional unemployment refers to the fact that the labour market is ceaselessly moving.
Thus, the amount of unemployment is always moving. People give up their jobs and
looking for new ones. Seeking for new jobs lasts longer time because of imperfect
information about vacancies. The workers sometimes don’t accept the first job, which is
offered to them. The students after graduations or women finishing their maternal duty
looking for their new jobs are also frictionally unemployed.
Generally spoken, frictional unemployment – consisting of search unemployment and
wait unemployment – is a term used for workers who are either searching for jobs or
waiting to take jobs in the near future.
This type of unemployment is considered as inevitable and somehow desirable. Frictional
unemployment is a part of natural unemployment.
8.4.3.2. Structural Unemployment
Structural unemployment is connected with structural changes in an economy, such as
changes in consumer demand or technology. These changes influence the structure of
demand for labour in terms of demanded skills (occupationally) or location
(geographically).
Structural unemployment relates to the fact that some industries expand whereas others
experience a decline in a dynamic economy. Unemployment occurs because the
composition of the labour force does not react quickly or completely to the new structure of
firms labour demand. Skills and talents of some workers become no longer marketable.
Such workers are structurally unemployed due to a mismatch between their skills and
the skills required by firms demanding labour.
Demand for labour also varies over time geographically. Some firms may move from cities
and its centres to industrial parks located in suburban surrounding areas. Some people can
become structurally unemployed, due to a mismatch between their location and the
location of firms demanding labour.
If we want to find the key difference between frictional and structural unemployment,
we must focus on the skills of the unemployed workers. Frictionally unemployed workers
have saleable skills whereas structurally unemployed persons must be retrained or reeducated
or geographically re-allocated so that they could find a new job. Comparing to
short-term frictional unemployment, structural unemployment is considered more serious,
because it lasts longer.