,commonly referred to as joblessness, is a situation where people arewilling and have the ability and skills required to work or areaggressively looking for job opportunities but are without jobs.Economists classify unemployment into five different categoriesdepending on what causes the unemployment. These are structural,frictional, seasonal, cyclical, and voluntary versus involuntaryunemployment. is undesirable because it causes economicproblems and is linked to human misery such poverty and socialpathologies as well as poor living standards. Therefore, policymakers should try to reduce unemployment rate as much as possiblethrough formulation of policies which will aid in creating more jobopportunities and increasing wages (Mary, 2006).
Structuralunemployment is normally caused by a mismatch between the skillswhich the workers have and what the employers require. For instance,structural unemployment may result when employees have skills withlow demand in the job market but lack the skills. It could alsoresult when there are too many workers and few job opportunities thuscausing disequilibrium in the market. In other words, structuralunemployment relies on the dynamic changes taking place in theeconomy and the economic societal needs. For example, marketconditions changes and improvement in technology regularly makes manyskills in the job market obsolete, thus rendering some peoplejobless. A typical example is the decreased use of typewritersresulted in decreased typewriters demand, which in turn causesstructural unemployment of employees working in the typewritersmanufacturing industries. Employees who get themselves unemployedbecause of such circumstances require to undergo more training toacquire the skills need so as to attain a new job. This type ofunemployment is seen as major economic and social problem mostlybecause it is long-term in nature and the high cost of retraining ofemployees to equip them with the required skills (Romer, 2011).
Frictionalunemployment is unemployment that results when people change jobs.Although some people are lucky to get new jobs before losing orleaving their old jobs, majority of people get sucked or leave theirjobs before they get new jobs. It takes some time for such people tofind jobs that fit their skills in the job market. During thisperiod, they are considered jobless as a result of frictionalunemployment. This type of unemployment is not considered asproblematic as structural unemployment because it lasts for shortdurations of time since majority of workers affected are experiencedand have relevant skills required in the job market (Romer, 2011).
Seasonalunemployment is unemployment that exists either because someindustries only manufacture or distribute their goods during certainperiods of they year or because some workers are demanded at specificseasons within a year. For instance, pool lifeguards normallyexperience seasonal unemployment since pools are mostly used duringhot seasons. Some of the sectors where seasonal unemployment isnormally experienced include tourism, construction and farmingindustries. In these industries, workers are hired during peakseasons and are dismissed when production is low. Seasonalunemployment is seen as a type of structural unemployment since theseasonal workers skills are not required in some job sectors for someduration during the year. However, economists view seasonalunemployment as less problematic to the economy compared to thestandard structural unemployment since the demand for seasonallyunemployed workers resurfaces after sometime (Romer, 2011).
Cynicalunemployment is unemployment that exists due to the business cyclestaking place in the economy, thus the term “cyclical”. This typeof unemployment takes place during economic depressions andrecessions. This is because when the demand for both goods andservices decrease due to consumer’s low purchasing power, certainindustries react by decreasing their production and dismissing mostof its employees instead of lowering their prices and wages. Whenthis occurs, the economy has more workers than the jobs available,thus causing unemployment. When the economy starts recuperating fromdepression or recession to increased economic growth, cyclicalunemployment disappears naturally as more people start to getemployed as industries increase their production due to increaseddemand of good ands services (Romer, 2011).
can be viewed as either voluntary or involuntary unemployment.Voluntary unemployment occurs when a person willingly leaves his orher old job to search for a new job. On the other hand, involuntaryunemployment occurs when people get fired or dismissed from their oldjobs and are forced to search for employment somewhere else.Generally, economists see involuntary unemployment as moreproblematic to the economy than voluntary employment becausevoluntary unemployment reflects the household utility maximizingchoices (Farmer, 2008).
Enduringhigh unemployment causes enormous effects to the unemployed peopleand the economy in general. These effects are difficult to measureand value, particularly the lasting social effects. The effects ofunemployment to the people and the economy include loss of a sourceof income to the unemployed people which lowers their purchasingpower and their living standard in general, higher budget deficitwhich in turn makes the government to increase taxation and reducepublic expenditure on merit and decline in national productivity oroutput. is also associated with social deprivation. Forinstance, there is a connection between unemployment and socialinterruption including reduced life expectancy, increased divorcerates and declining health. Social crimes also increase withincreasing rates of unemployment. When some people get unemployment,they turn to social crimes such as prostitution, stealing, andillegal businesses so as to get some source of income. affects the unemployed people psychologically because of havingdifficulties in sleeping, anxiety and depression. All these affectnegatively the mental well being of the unemployed people.
Dueto the effects of unemployment on the economy and the society,measures to solve the unemployment problem should be taken. Thesolution to unemployment is to create more job opportunities. Thiscan be done by applying the following economic policies. Use ofdemand side policies such as fiscal policy and monetary policiesincreases labor demand and reduce unemployment. Increased demand forthe goods produced and services rendered, increase labor demand inthe economy thus increasing job opportunities. Also, supply sidepolicies such as workers union activities and minimum wages preventswages from declining, thus encouraging the workers to continueproviding their services at the prevailing wages. Educating employeeson how to please their employers, reducing government regulation andtaxes charged on businesses are also supply side policies which wouldhelp to reduce unemployment. Another measure to reduce unemploymentis to shift the tax burden on firms that are labor intensive to thosefirms tat are capital intensive. The tax revenue obtained from thiswould used to finance public projects such as construction projectsthat are labor intensive thus creating more job opportunities (Mary,2006).
Farmer,R. A. (2008). "".Macroeconomics.Cincinnati: South-Western.
Mary,I. M. (2006). Economicsof unemployment,New York, NY: Nova Science Publ.
Romer,D. (2011). "".Advanced Macroeconomics.New York: McGraw-Hill.