Frictional unemployment exists because it takes time for job seekers to find businesses who are looking to hire and vice versa (Littenberg & Tregarthen, 2009). Businesses post wanted ads on job search sites and unemployed workers use the sites to find employers who are looking for their skill set. The time it takes the two to find each other is frictional unemployment (Littenberg & Tregarthen, 2009). Frictional unemployment can be reduced by things such as job fairs, employment services, and active recruiting by the businesses; pretty much anything that makes it easier to match prospective employees to future employers would help frictional unemployment.
Structural unemployment occurs when an employer is looking to hire and a job seeker wants a job but the job seekers skills do not meet the needs of the employer (Littenberg & Tregarthen, 2009). Structural unemployment could be caused by advances in technology or because a certain type of job moves to a new region (Littenberg & Tregarthen, 2009). If a worker only knows how to work on a certain item and that item becomes outdated because of a new version or technology; then there is no demand for the skill (Littenberg & Tregarthen, 2009). The employee would have to become proficient in the technology or skill set in demand, in order to meet the needs of prospective employers in that field. This type of unemployment could also happen if the only basket weaving business in the state moved to another state. In order retain that job or get a new job the workers would have to either move to where their skill is needed or learn a new skill that is sought after in their area.
Both types of unemployment listed above are considered the natural rate of unemployment when the economy is operating at its potential (Littenberg & Tregarthen, 2009).
Cyclical unemployment follows the ups and downs of the business cycle (Littenberg & Tregarthen, 2009). If output (GDP) is high then the cyclical rate is low, but if output slows then demand decreases and so does demand for labor which cause the cyclical rate of unemployment to rise (Littenberg & Tregarthen, 2009). High cyclical unemployment is undesirable because it means our economy is producing less. Cyclical unemployment is not analyzed in the long term only structural and frictional are because the output in the long run becomes the potential output; it is said there is no cyclical unemployment when the economy is operating at its potential (Littenberg & Tregarthen, 2009).
I think some unemployment is inevitable but not undesirable. If every person was employed then no one would be striving to learn something new or educate themselves to move on to something bigger. Frictional unemployment could occur because a cashier finished her nursing degree that she went to Night College for. In this instance she would be bettering herself and looking for a higher paying and more rewarding job that requires a needed skill. If there were no structural unemployment that would either mean that companies trained their employees on new technology as soon as it became available or that we never advanced technologically. To me the natural rate of unemployment means progress on a personal and national level. Of course we might wish the rate of structural or frictional unemployment were less than it is but they are still desirable in certain situations and inevitable in a growing economy (Littenberg & Tregarthen, 2009).
I also think that during boom periods unemployment would especially be inevitable. The duration of unemployment may be shorter during a boom but you would think employees would take the opportunity to try to advance their career or maybe try for a job that they would rather have that wasn 't in demand until the boom.
References Littenberg, L., & Tregarthen, T. (2009). Principles of macroeconomics, v.1.0. Irvington: Flat World Knowledge. Retrieved from http://catalog.flatworldknowledge.com/bookhub/reader/23?cid=&e=rittenmacro-ch16
References: Littenberg, L., & Tregarthen, T. (2009). Principles of macroeconomics, v.1.0. Irvington: Flat World Knowledge. Retrieved from http://catalog.flatworldknowledge.com/bookhub/reader/23?cid=&e=rittenmacro-ch16
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