3(Unemployment) 2.1

Unemployment

Unemployment

A situation where people who are actively looking for a job cannot find one, resulting in lost economic output and reduced national income.

Frictional Unemployment

Unemployment that occurs when workers leave one job and spend time looking for a new one, leading to lower living standards and quality of life.

Cyclical Unemployment

Unemployment that occurs as a result of a fall in aggregate demand due to an economic recession, causing skill erosion and making it harder to find work.

Structural Unemployment

Unemployment that occurs due to long-term changes in the structure of an economy, where workers have the wrong skills in the wrong place and are unfit for employment.

Technological Unemployment

Unemployment that occurs when machinery replaces human labor, providing cheap labor for firms but reducing labor costs and increasing unemployment.

Consequences of unemployment

Lost economic output - Unemployment represents wasted labor that could be contributing to a nation's GDP. This lost economic production reduces national income and tax revenues.

Lower living standards - The unemployed have less income to spend on necessities and luxuries. This can lead to poverty, financial stress, and reduced quality of life.

Skill erosion - Those unemployed for long periods risk having their skills deteriorate over time. This makes it harder to find work and lowers future earnings potential.

Social costs - Unemployment is linked to physical and mental health problems, as well as higher crime rates and social unrest. This places strain on public health and social support systems.

Cheap labor for firms - High unemployment provides companies with a larger pool of available labor, allowing them to be more selective and hire workers at lower wages. This reduces labor costs.

Seasonal Unemployment

occurs when demand for a good or service is in need only during certain seasons suck as ski rent stations and ski instructors during winter season