There are many forms of unemployment and it is a major economic indicator.
Definition: a situation where a person of working age wants to work, is available to work, and is actively looking for a job but cannot find one
Why Unemployment Matters:
– Reflects Economic Health: Shows the gap between the number of people who want work and the actual jobs available.
– Influence Spending: High unemployment lowers consumer buying power, slowing down business growth
– Guides Policy: Central banks and governments track it closely to decide on interest rates and money supply rules.
Types of Unemployment:
Frictional – Temporary unemployment that occurs when workers are between jobs.
Structural – A mismatch between the skills worker possess and the skills demanded by employers.
Cyclical – Job losses caused by economic downturns or recessions. It changes with the business cycle and is driven by a drop in overall consumer and business demand.
Seasonal – Predictable job losses that occur at specific times of the year such as agricultural workers after harvest or staff at winter ski resorts