|Posted on April 16, 2014 at 9:55 AM|
There are three types of unemployment that make up the rate of unemployment in a given economy.
1. Frictional unemployment (temporary, seasonal): includes recent graduates and people who quit their job to find something better.
2. Structural unemployment (skills no longer needed): includes people who are replaced by technology or new industries (creative destruction). These people need to retrain or move to find work.
3. Cyclical unemployment (due to recession): includes people who are laid off because the economy is weak (downturn in the business cycle).
This No Bull Review video discusses the three types of unemployment and the natural rate of unemployment.
AP Macroeconomics Unit 2 Measuring Economic Performance