Question:

Economics - Unemployment?

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Why is it difficult to distinguish between frictional, structural, and cyclical unemployment?

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  1. They are all related in a way and overlap with eachother.


  2. Its not difficult to understand the different types of unemployment, but how does distinguishing the types help the cause for unemployment?  There will always be people who are 'floaters' (frictional unemployement), 'union workers' (classic unemployment), 'unqualified' (structural unemployment), and 'NO WORK' (cyclical unemployment; referred to as a recession).

  3. There is some overlap between the categories and it can be difficult to classify a worker in one or the other.

    Frictional unemployment is that level of unemployment so the labor market operates smoothly.  It includes unemployed workers like someone who just got out of school and is looking for a first job; or someone who decides to move and needs a new job in a new location, etc.

    Structural unemployment is unemployment affecting a specific industry or group of workers.  It includes people thrown out of work due to adoption of new technology and their skills are obsolete; automation; legal restrictions that reduce production in their industry; etc.

    Cyclical unemployment is unemployment due to the normal ups and downs in the economy.

    The difficulties lie in placing an unemployed worker in a certain category -- for instance -- we have discouraged workers (people who are unemployed so long they are no longer considered part of the labor force, but they would work if a job appeared for them), part-time workers are considered employed and yet are they employed the way they wish to be, and there are other potential workers who are not considered to be available for work and yet would like to have a job (eg a 8 month pregnant unemployed woman would find it hard to get a job).

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