What are the three types of unemployment? Unemployment is seen by some as undesirable. Are all three types of unemployment undesirable? Explain

b. The United States has an unemployment compensation program that provides income for those out of work, why should we worry about unemployment?

 

a. Types of unemployment

·       Frictional - Is voluntary and caused by direct transitions in employment. It Occurs when workers leave employment to search for new employment or transition period to new jobs

·       Structural - A type of long-term unemployment caused by shifts within the economy. It comes about due to technological changes within the economic structure, over time.

·       Cyclical - It's the variation In the number of the unemployed over courses of economic recessions and booms

Not all types of unemployment are undesirable since frictional unemployment occurs due to the search process of jobs and it allows workers to move to better, higher paying and more productive jobs hence providing them with more income. There is also better allocation of labor resources leading to increased production of goods and services within the economy.

b) Unemployment has major effects such as financial hardships, poverty, housing stress, alienation, increased social isolation, crime, among others. Despite the U.S having unemployment compensation program, the program does not cater for needs of every unemployed individual such as those who leave job voluntarily. The funds given are also merely enough to cater for all the basic needs of the unemployed hence there are a majority who do not gain a sense of self-worth or accomplishment by receiving this compensation. Unemployment can affect the entire economy since the unemployed do not produce anything as the compensation keeps the demand in the economy high.

Step-by-step explanation

The three types of unemployment are frictional, cyclical, and structural. Frictional unemployment occurs because of the voluntary changing of people from their initial jobs within an economy. It occurs due to the period that one might take before they find another suitable job. It is because of the fact that market processes take time and information can be costly such as the search, recruiting process and matching of jobs. Cyclical unemployment is caused by the variation which occurs in the number of the unemployed over the course of economic downturns and upturns, for instance those related to changes in the oil prices. Unemployment is high during recessionary periods. The structural unemployment takes place due to technological changes within the economic structure in which the labor market operates. For instance, when humans are replaced with machines or upgrading of technologies' that may require experts to operate. Although unemployment is undesirable, not all types are. Frictional unemployment comes with the search of better, higher paying and more productive jobs which may lead to more utilization of labor skills and productivity in the economy.

b) The U.S has an unemployment compensation program to help provide income to the unemployed. However, the worry regarding unemployment still exists since such a program does not cover everyone for instance those who leave employment voluntarily or those who were never covered by insurance policies before. Also, the program does not help the individuals meet all their basic needs and it is also associated with individuals feeling a sense of lack of self-worth or accomplishment through receiving the compensation. In addition, unemployment could be inflationary since there are high taxes on taxpayers caused by the zero supply of the unemployed and the high demand within the economy as it tries to compensate the unemployed.