Economics (Unemployment)

Economics - Frictional and Structural Unemployment

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Economics - Structural and Frictional Unemployment

This assignment mainly compares and contrasts the two broad categories of unemployment which are Structural and Frictional unemployment . The type of unemployment which has a greater impact on economy will also be identified and the reasons for this phenomenon will also be discussed

Frictional Unemployment

The short term unemployment in an economy refers to frictional unemployment which is present due to normal market adjustments . The factors contributing to the

hindrances of employment in frictional unemployment are business adjustments , imperfections of market information that are imperfect or the individual 's preferences for employment are much higher than available . Those people are frictionally unemployed who do not have jobs in the market with wages of current market level these jobs are within reasonable reach and are suited to their skills (Gilpatrick , 1966

However , this type of unemployment is not long-term . Frictional unemployment can be removed without any increase in aggregate demand and in a short period of time . There are jobs available for those who are unemployed , under this type of unemployment , but the workers are not aware of other opportunities , they require time to readjust to business changes or they choose to wait for other job opportunities . The assumptions of frictional unemployment are that labor productivity state of technology and the skills of labor force remain constant in the short term (Gilpatrick , 1966

Structural Unemployment

Structural unemployment occurs because of the structural changes in...