unemployment

Because the unemployment level affects economic growth and activity, this figure is closely-watched. Arleen and John Hoag, author of “Introductory Economics” explain that unemployment is caused in a number of ways, and classifies unemployment into four different groups. Frictional unemployment is caused when people leave or relocate from one job in pursuit of another. Seasonal unemployment is caused when people are laid off during an industry’s slow season, like laying off ski trainers at snow resorts during the summertime, or laying off farmers during the winter. Cyclical unemployment is the most pernicious, as this occurs during times of low economic productivity and an overall slowdown. Cyclical unemployment occurs when consumers buy fewer goods or services, and companies are unable to obtain financing to stay in business. The fourth type of unemployment is called structural unemployment. This type of unemployment happens when there are too many unemployed, unqualified people applying for other jobs. An example is an auto worker trying to find another job in a new industry when her plant closes. She, along with all of the other auto workers, are competing for jobs with few qualifications and credentials other than the ones gained from the auto industry.