types of unemployment Flashcards
(13 cards)
What is seasonal unemployment?
Casual unemployment that occurs when workers are laid off on a short-term basis at certain times of the year due to fluctuations in weather conditions or demand.
Occurs in trades such as tourism, agriculture, catering and building.
What can deficient aggregate demand lead to in terms of cyclical unemployment?
It can lead to the economy producing inside its production possibility frontier.
This indicates that resources are not being fully utilized.
Cyclical unemployment is also known as what?
Keynesian Unemployment and demand deficient unemployment.
It occurs during recession or depression.
What causes cyclical unemployment?
A lack of aggregate demand in the economy.
This results in reduced demand for labor.
What is real-wage unemployment?
Unemployment caused by a too high level of real wages (above the equilibrium real wage rate).
Real wage is the purchasing power of the nominal wage, adjusted for inflation.
How do Keynesian economists view real-wage unemployment?
They believe it to be involuntary, caused by wage stickiness or inflexibility.
Workers have no control over this situation.
How do free market economists view real-wage unemployment?
They believe it is voluntary, suggesting workers and trade unions should accept wage cuts.
This perspective emphasizes market flexibility.
What is the natural rate of unemployment?
The level of unemployment that exists when the economy’s aggregate labour market is in equilibrium.
It includes frictional and structural unemployment.
What types of unemployment make up equilibrium unemployment?
Frictional and structural unemployment.
These are always present due to ongoing economic changes.
What does full employment mean?
It does not necessarily mean that every single member of the working population is in work.
There will always be some level of frictional and structural unemployment.
What is frictional unemployment?
Unemployment that occurs when individuals are temporarily without a job while transitioning from one position to another.
What is structural unemployment?
Unemployment that arises from a mismatch between the skills of the workforce and the demands of the job market.
What factors can make frictional and structural unemployment worse?
Changes in economic conditions, skills mismatch, and labor market rigidity.
