Frictional unemployment exists because it takes time for job seekers to find businesses who are looking to hire and vice versa (Littenberg & Tregarthen, 2009). Businesses post wanted ads on job search sites and unemployed workers use the sites to find employers who are looking for their skill set. The time it takes the two to find each other is frictional unemployment (Littenberg & Tregarthen, 2009). Frictional unemployment can be reduced by things such as job fairs, employment services, and active recruiting by the businesses; pretty much anything that makes it easier to match prospective employees to future employers would help frictional unemployment.
Structural unemployment occurs when an employer is looking to hire and a job seeker wants a job but the job seekers skills do not meet the needs of the employer (Littenberg & Tregarthen, 2009). Structural unemployment could be caused by advances in technology or because a certain type of job moves to a new region (Littenberg & Tregarthen, 2009). If a worker only knows how to work on a certain item and that item becomes outdated because of a new version or technology; then there is no demand for the skill (Littenberg & Tregarthen, 2009). The employee would have to become proficient in the technology or skill set in demand, in order to meet the needs of prospective employers in that field. This type of unemployment could also happen if the only basket weaving business in the state moved to another state. In order retain that job or get a new job the workers would have to either move to where their skill is needed or learn a new skill that is sought after in their area.
Both types of unemployment listed above are considered the natural rate of unemployment when the economy is operating at its potential (Littenberg & Tregarthen, 2009).
Cyclical unemployment follows the ups and downs of the business cycle (Littenberg & Tregarthen, 2009). If output (GDP) is high then the cyclical rate is low, but if output slows then demand decreases and so does demand for labor which cause the cyclical rate of unemployment to rise (Littenberg & Tregarthen, 2009). High cyclical unemployment is undesirable because it means our economy is producing less. Cyclical unemployment is not analyzed in the long term only structural and frictional are because the output in the long run becomes the potential output; it is said there is no cyclical unemployment when the economy is operating at its potential (Littenberg & Tregarthen, 2009).
I think some unemployment is inevitable but not undesirable. If every person was employed then no one would be striving to learn something new or educate themselves to move on to something bigger. Frictional unemployment could occur because a cashier finished her nursing degree that she went to Night College for. In this instance she would be bettering herself and looking for a higher paying and more rewarding job that requires a needed skill. If there were no structural unemployment that would either mean that companies trained their employees on new technology as soon as it became available or that we never advanced technologically. To me the natural rate of unemployment means progress on a personal and national level. Of course we might wish the rate of structural or frictional unemployment were less than it is but they are still desirable in certain situations and inevitable in a growing economy (Littenberg & Tregarthen, 2009).
I also think that during boom periods unemployment would especially be inevitable. The duration of unemployment may be shorter during a boom but you would think employees would take the opportunity to try to advance their career or maybe try for a job that they would rather have that wasn 't in demand until the boom.
References Littenberg, L., & Tregarthen, T. (2009). Principles of macroeconomics, v.1.0. Irvington: Flat World Knowledge. Retrieved from http://catalog.flatworldknowledge.com/bookhub/reader/23?cid=&e=rittenmacro-ch16
References: Littenberg, L., & Tregarthen, T. (2009). Principles of macroeconomics, v.1.0. Irvington: Flat World Knowledge. Retrieved from http://catalog.flatworldknowledge.com/bookhub/reader/23?cid=&e=rittenmacro-ch16
You May Also Find These Documents Helpful
-
When a person in the United States has been actively looking for a place of employment and cannot find an employer, then they are categorized as unemployed. Now the unemployment rate is put into percentages as the total available work force seeking employment. Unemployment in the United States were at a high of 15.4 million is October 2009 and now sits at 12.5 million in April 2012. So for about 3 years as the U.S tries to fight through the hardship of the low economy the unemployment has not drop that significantly. What really has a strong impact on the unemployment in a country is supply and demand. When the U.S economy took a drop the demand for certain thing also falls with it as people become more conservative. This also hurts the work of employment because if people buy less then there is need to also make less of whatever is not being…
- 658 Words
- 3 Pages
Good Essays -
Unemployment are people who do not currently have a job but are actively looking for a job. The unemployment rate is the percentage of people in the labor force who are unemployed. There are three basic types of unemployment. The first is a cyclical which is the result of fluctuations in real GDP. Unemployment rises when the real GDP falls, and falls when the economy improves. The second is Frictional unemployment which occurs naturally in the economy. It refers to the time it takes to find an appropriate job. And the third is Structural unemployment which refers to the mismatch between job openings and the skill of workers seeking jobs.…
- 1088 Words
- 3 Pages
Good Essays -
Policy suggestions to reduce structural unemployment include providing government training programs to the structurally unemployed, paying subsidies to firms that provide training to displaced workers, helping the structurally unemployed to relocate to areas where jobs exist, and inducing prospective workers to continue or resume their education.…
- 1082 Words
- 5 Pages
Better Essays -
Frictional Unemployment – this type of unemployment can also be caused by failing firms, poor job performance, or obsolete job skills. Usually someone out of work, it takes time to find future employment, the time spent out of work is frictional unemployment.…
- 431 Words
- 2 Pages
Satisfactory Essays -
The extinction of frictional unemployment would keep people in the same jobs for life, creating rifts in a system that suppresses innovation and rusticates skills. More importantly, frictional unemployment matches the demand for workers with the supply. The last several years our nation has struggle with this barrier because of lack of education or not enough experience in a certain field. Frictional employment arises from those candidates that are just graduating for college and those who are unemployed because they are looking or changing occupation. Frictional unemployment is present now because there is imperfect data in the labor market and workers have to search for employment suitable for their skill set.…
- 826 Words
- 4 Pages
Good Essays -
Selected Answer: In In general the four types of unemployment are frictional, which is when there is a process of selection from the employers and the potentially employed. It is important for both parties to know that the particular job is a good fit so that in a month they both don’t have to start over with the hiring process. Seasonal unemployment is due to many factors including climate, holidays, and tourism. It is important to have seasonal employment because these times boost income to compensate for when things are leaner. Another form is structural unemployment. This is when the skills of the applicants don't match the needs of the employers. This is more of an issue than the first two reasons because it takes more time to acquire the necessary skills or find the person who already possesses these skills. The last example of unemployment of cyclical. This is when unemployment fluctuates and cycles along with the state of the economy at any given time. There are government policies that try to keep this type of unemployment at bay.…
- 1110 Words
- 5 Pages
Satisfactory Essays -
There is an economic cost of unemployment. When the economy fails to create enough jobs for all who have the necessary skills and are willing to work, potential production of goods and services are irretrievably lost.…
- 367 Words
- 2 Pages
Satisfactory Essays -
This type of unemployment is beneficial to workers because it allows them to seek for jobs they want the most or jobs those best suits them. It also benefits companies, because it allows them to choose from among the best talent. The absence of frictional unemployment entails people to remain in the same jobs for life, creating a stagnant system that suppresses innovation and rusticates skills.…
- 551 Words
- 3 Pages
Satisfactory Essays -
Unemployment rates fluctuate when the supply and demand for human resources are out of balance. The supply and demand are a result of the interaction of economic, policy and structural factors. Economic factors affect both supply and demand. The demand for goods and services increases production which results in the demand for workers, increasing the employment rate. The common thought among economists is that market-driven economies move in cycles and when they drop below certain levels unemployment may result. The moving of production from high wage countries to low wage countries is another factor that increases unemployment. A declining manufacturing sector will result in not enough jobs to go around along with third world competition. While new jobs are being created in the technology and service sectors it is not enough to make up for the amount of jobs that have been lost due to moving the manufacturing of goods out of the U.S.…
- 1095 Words
- 4 Pages
Good Essays -
The longer the duration of unemployment, the lower the chances of finding fresh employment. Also, losing income involuntary has a significant impact. Many people have major commitments (mortgage, credit agreements, etc.) that fall in real living standards. Other things being equal the greater the amount of goods and services produced, the greater the labor required for production. Economic growth and employment go hand in hand. Regulation and taxation that discourage the operation of business will also reduce the need for labor. Entrepreneurs face regulations that force allocation of resources away from production. For example, rather than purchasing raw materials needed for final production, managers must instead purchase equipment mandated by OSHA or EPA. Rather than using clerks to expedite sales, they must use clerks to fill out forms required by the state. Regulations and taxes may have an especially strong impact on smaller companies since they have less access to capital markets than larger enterprises.…
- 1034 Words
- 5 Pages
Better Essays -
Frictional unemployment plays quite a major role within any given economy. This is due to the fact that it indicates that an economy is doing well. In line with this unemployment exists in an economy that is growing faster characterized by an expanding labor force that is adaptable, flexible and mobile and which has many choices2. Workers benefit greatly from frictional unemployment since it provides them with the opportunity to look for jobs that suits them most. Additionally it is also beneficial to companies since it enables the companies to a wide range of alternatives to choose from as far getting the best talent is concerned. if there is no frictional unemployment in the economy many people would engage in doing the same kind of jobs their entire life hence a stagnant system would be created that would suppress both rusticate skills and innovation3.…
- 957 Words
- 3 Pages
Better Essays -
Classical economists promote the idea of two fundamental suggestions. The first is that wages equal the value that would be lost if employment were to diminish by one. The second is that unemployment changes in two categories. The first is defined as frictional unemployment. Frictional unemployment can be mainly explained by reasons based on inconsistent information. First, businesses intermittently try and balance their resources and with miscalculation and changes in demand they will increase or decrease the amount of employees they have. Also, people in-between jobs may not have enough information to find and select the right job. A classical economist would also describe voluntary unemployment. This type of unemployment occurs with the refusal or inability of workers to find jobs, due to legislation, social practices, collective bargaining or intransigency.…
- 3337 Words
- 14 Pages
Powerful Essays -
Unemployment in an economy is an indicator that the economy is not operating under full employment. Unemployment is a situation where individuals who are eligible and willing to work cannot get work in the economy. There are several types of unemployment in the US economy. They include voluntary unemployment where individuals voluntarily decide not to take any employment opportunity in the economy. Seasonal unemployment also arise where household are often in and out of employment because of the seasonal changes in the work. Cyclical unemployment also arises because of the changes in business cycles. During booms, most of the labor force is in employment, and during recession, there are high levels of unemployment in the economy. Frictional unemployment arises where the household take time when they leave one job and before getting another job. This transition period from one job to the other is referred as the frictional unemployment. Structural unemployment is also evident in the economy where the skills of t he households fails to match the needs of the industries in the economy (Zhang, 1).…
- 572 Words
- 3 Pages
Good Essays -
One sociological perspective on unemployment can be taken from the famous Functionalist Theory. Functionalists believe everything serves a specific function in our society and these functions need to be understood (Kendall 23). The theorist behind functionalism is Durkheim. Durkheim’s concern was how to preserve society. The basis for social order was not economic, but rather moral. In a functionalist society, everyone has a role and a purpose. In order for this theory to be successful, the individuals in a…
- 1834 Words
- 8 Pages
Better Essays -
Unemployment can be generally broken down into several types that are related to different causes. Classical unemployment occurs when wages are too high for employers to be willing to hire more workers. Wages may be too high because of minimum wage laws or union activity. Consistent with classical unemployment, frictional unemployment occurs when appropriate job vacancies exist for a worker, but the length of time needed to search for and find the job leads to a period of unemployment. Structural unemployment covers a variety of possible causes of unemployment including a mismatch between workers' skills and the skills required for open jobs. Large amounts of structural unemployment can occur when an economy is transitioning industries and workers find their previous set of skills are no longer in demand. Structural unemployment is similar to frictional unemployment…
- 378 Words
- 2 Pages
Satisfactory Essays