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Types of Unemployment

The document outlines 10 types of unemployment: 1) Disguised unemployment which occurs in developing countries where there are more agricultural workers than needed. 2) Residual unemployment caused by personal factors. 3) Technological unemployment caused by job displacement from new technologies. 4) Structural unemployment caused when job skills are no longer in demand. 5) Frictional unemployment occurs between jobs. 6) Cyclical unemployment occurs during economic downturns. 7) Natural rate of unemployment is expected due to imperfect information. 8) Real wage unemployment occurs when wage increases outpace job growth. 9) Seasonal unemployment fluctuates by season. 10) Geographical unemployment is caused by inability to relocate for work.

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Vaniya Shania
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353 views2 pages

Types of Unemployment

The document outlines 10 types of unemployment: 1) Disguised unemployment which occurs in developing countries where there are more agricultural workers than needed. 2) Residual unemployment caused by personal factors. 3) Technological unemployment caused by job displacement from new technologies. 4) Structural unemployment caused when job skills are no longer in demand. 5) Frictional unemployment occurs between jobs. 6) Cyclical unemployment occurs during economic downturns. 7) Natural rate of unemployment is expected due to imperfect information. 8) Real wage unemployment occurs when wage increases outpace job growth. 9) Seasonal unemployment fluctuates by season. 10) Geographical unemployment is caused by inability to relocate for work.

Uploaded by

Vaniya Shania
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Types of unemployment

1-Disguised unemployment
This type of unemployment is to be found in the backward and the underdeveloped countries of
asia and africa. The term ‘disguised unemployment’ refers to the mass unemployment and
underemployment which prevail in the agricultural sector of an underdeveloped and
overpopulated country. For example, if there are four persons trying to cultivate an area of land
that could be cultivated as well by three persons, then only three of these persons are really fully
employed and the remaining fourth person represents disguised unemployment. The people in
underdeveloped countries are outwardly employed but actually they are unemployed, the reason
being that agricultural production would suffer no reduction if a certain number of them are
actually withdrawn from agriculture.
This can also be seen when the growth of the labour force exceeds the amount of investment
made. The lack of investment is due to shortages in real factors such as shortage of skilled
labour, managers, right type of entrepreneurs, etc. As a result, there is over supply of labour
available and these excess labour are ‘employed” (to be exact, underemployed) in jobs when
there is already enough workers. Therefore, the marginal productivity of such labour is low. This
type of disguised unemployment is caused by the chronic shortage of capital resources in relation
to the rapidly growing population.

2-Residual Unemployment
This type of unemployment is caused by personal factors such as old age, physical or
mental disability, poor work attitudes and inadequate training.

3-Technological Unemployment
This type of unemployment is caused by changes in the techniques of production. Technological
changes are taking place constantly, leading to the discovery of new production methods
involving a good deal of mechanization. This naturally results in the displacement of labour and
finally, unemployment.

4-Structural Unemployment –
Changes occur in market economies such that demand increases for some jobs skills while other
job skills become outmoded and are no longer in demand. For example, the invention of the
automobile increased demand for automobile mechanics and decreased demand for farriers
(people who shoe horses).

5-Frictional Unemployment –
This type of unemployment occurs because of workers who are voluntarily between jobs. Some
are looking for better jobs. Due to a lack of perfect information, it takes times to search for the
better job. Others may be moving to a different geographical location for personal reasons and
time must be spent searching for a new position.

6-·Cyclical Unemployment –
This occurs due to downturns in overall business activity.

As previously noted, full employment does not equate to zero unemployment. Some
unemployment is normal in a market economy and is actually expected as part of an efficient
labor market. Full employment is defined as the level of employment that occurs when
unemployment is normal, taking into account structural and frictional factors.

7-Natural Rate Of Unemployment


is that amount of unemployment that occurs naturally due to imperfect information and job
shopping. It is the rate of unemployment that is expected when an economy is operating at full
capacity. At this time in the U.S., the natural rate of unemployment is considered to be about 5%.

8-Real Wage or Classical Unemployment

As appeared by the name this type of inflation occurred when there is a demand to increase in
wages. Normally when labor unions and organizations negotiate for higher wages, the situation
arises employer does not offer more jobs due to rising wage rates and the demand for labor falls
and raise unemployment level.  This is also known as disequilibrium unemployment.

9-Seasonal Unemployment

Some time in different countries unemployment level increases in some specific season. In
countries with harsh winters may cause in increase in seasonal unemployment. Some
governments like England publish a seasonally adjusted unemployment record. Economic
activities in the oceans and festivals increases and during this period unemployment level
decreases.

10-Geographical unemployment.

Unemployment caused by difficulty to move from an area with low demand to areas with high
demand for labour. This is often caused by social factors like family ties, cost of living etc

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