Types of Unemployment

FRICTIONAL UNEMPLOYMENT This occurs in the period between leaving one job and finding another. Frictional unemployment is made worse by geometrical immobility. E.g. may be losses in 1 area and vacancies in another- why dont people move? Lack of information can worsen the problem. Governments reduce this by improving information about vacancies, job centres, financial incentives, retraining schemes etc. Successful policies can reduce the firms recruitment costs, training costs and limit the loss of production due to labour problems. STRUCTURAL UNEMPLOYMENT Example of structural unemployment in the UK arise in the steel, shipbuilding and textiles industries. If the decline is slow it may be called frictional, however if there is rapid decline it can contribute to regional unemployment. (I.e. unemployment in that region is higher than the national average). Governments attempt to reduce this via grants, low interest loans etc. in areas of high structural unemployment. They also forbid industries to establish in areas with an excess of vacancies over applicants. Governments also aim to improve the infrastructure of the regions suffering from structural unemployment. Quotas and/or duties can be imposed on imports, which are causing a decline in domestic industries, however this may cause problems (e.g. retaliation).

TECHNICAL UNEMPLOYMENT The remedies for this involve retraining schemes, changing educational policy etc. To remain internationally competitive governments need to be supportive.

CYCLICAL UNEMPLOYMENT This is unemployment tied to the trade cycle.