Types and causes of unemployment
Work to complete: Frictional and seasonal unemployment are fairly short term forms of unemployment. Distinguish between the two and explain the causes of each. Structural unemployment is of greater concern than frictional and seasonal unemployment
The sum of frictional, seasonal and structural unemployment is the “natural rate of unemployment”, i.e. the inevitable level of unemployment which exists at YFE (the full employment level of output or potential output)… there will always be labour market imperfections, e.g. lack of information (imperfect knowledge) or labour market rigidities. Any unemployment which exists beyond this natural rate of unemployment has been caused by the business cycle, e.g. the economy is experiencing a recessionary gap (not at long-run equilibrium) a. Describe cyclical unemployment. b. Use diagrams to explain what causes cyclical unemployment.
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March 2021
Maree SpraggonTeacher of IB Economics at the American School of Budapest Categories |