Unemployment Types and Public Policy

Flashcards covering the types of unemployment and related public policies discussed in the lecture notes.

Natural Rate of Unemployment

The normal level of unemployment around which the unemployment rate fluctuates.

Cyclical Unemployment

Deviation of unemployment from its natural rate.

Cyclical Unemployment

Unemployment that increases during recessions.

Cyclical Unemployment

Unemployment that decreases during expansions.

Structural Unemployment

When jobs are permanently eliminated.

Frictional Unemployment

When workers quit one job in search of a better job.

Public Policy

Government programs to facilitate job search.

Unemployment Insurance

A government program for the unemployed who were laid off because their previous employers no longer needed their skills.

Unemployment Insurance (Pro)

Partially protects workers’ incomes, reduces the hardship of unemployment, and makes workers more likely to turn down unattractive job offers.

Unemployment Insurance (Con)

Increases the amount of unemployment because unemployed workers devote less effort to job search.