LEARNING GOAL:
Describe, using examples, the meaning of frictional, structural, seasonal and cyclical (demand-deficient) unemployment. Distinguish between the causes of frictional, structural, seasonal and cyclical (demand-deficient) unemployment.
ASSIGNMENT:
Answer/Complete the following questions. Just one paragraph each. Notes from class and Youtube links under the questions.
(a) Illustrate using a diagram the difference between structural and cyclical / demand-deficient unemployment. [10 marks]
(b) Using world examples, evaluate the view that the use of supply-side policies is the most effective method of reducing unemployment in the economy.
NOTES:
Types of unemployment: Cyclical (Demand Deficient)
The unemployment that results from a recession in a business cycle.
The decline in aggregate demand creates widespread unemployment
- Financial Crisis
- COVID-19 Pandemic
- Oil Price Shock
- Changes in Interest Rates
- Trade Tariffs
- Stock Market Crash
- Natural Disasters
- Geopolitical Tensions
Structural Unemployment
Long term decline in the demand for labour in a specific industry.
- Automation (modernization)
- Technological change
Loss of comparative advantage
Seasonal Umemployment
Caused by the regular and periodic changes in demand for a certain goods or service.
- School bus drivers during summer holidays
- Farm help
- Ski instructors
Frictional Unemployment
- This occurs when people are between jobs owing to the time delay from leaving a job and finding or starting a new one. This happens because it takes time to find and apply for the right jobs and for employers to find the right person for a job.
