Types of unemployment

No. Types Explanation

1. Frictional / Search Occurs when people are in between jobs, entering or re-
unemployment entering the labour force.
Examples:
1. When students are looking for that first job.
2. When mothers are returning to the workforce.
3. When workers are fired, or
4. Laid off due to business-specific reasons.
2. Structural Arises due to structural changes in the economy of a country.
unemployment Examples:
1. When an industry’s replacement of machinery workers
with robots, those that don’t learn how to manage the
robots that replaced them need retraining for other jobs.
3. Cyclical Occurs when there is a lack of jobs because of a downswing
unemployment in a business cycle or a recession.
4. Seasonal Arises due to seasonal variation in the activities of particular
unemployment industries.
Industries where seasonal unemployment is common include
farming, tourism, and construction.
Examples:
1. Resort workers
2. Ski instructors,
3. Ice cream vendors
4. People who harvest crops.
5. Construction workers are laid off in the winter
6. School employees
5. Technological Occurs because of changes in the techniques of production.
unemployment Examples:
1. Workers who lack the adequate skills and education in
agricultural sector are laid off, in favour of modern
machinery.
6. Classical Caused when wages are ‘too’ high.
unemployment (Real Example,
wage / induced) 1. When workers themselves were blamed for not accepting
lower wages, or for asking for too high wages.
7. Long – term Occurs for those actively looking for a job for over 27 weeks.
unemployment
8. Underemployment People who work part-time, but they really want to work full
time if they could find a full-time job.
9. Regional Occurs when structural unemployment affects local areas of
unemployment an economy.
Agricultural, fishing, tourism, and other industries are
dependent on their geographical boundaries, the weather, and
consumer demand.
10. Voluntary Happens when a worker decides to leave a job because it is
unemployment no longer financially fulfilling.
Example:
1. Worker whose take-home pay is less than his cost of living.
11. Involuntary This is considered as a major problem than voluntary
unemployment employment because utility enhancing household choices are
reflected by voluntary unemployment.
12. Demand deficient Happens especially during a recession.
unemployment When there is a reduction in the demand for the company’s
products or services, they will most likely cut back too on their
production, making it unnecessary to retain a wide workforce
within the organization. In effect, workers are laid off.
13. Chronic Occurs when a country has unemployment for the long term.
unemployment Main reasons for chronic unemployment in underdeveloped
countries:
1. Low capital formation.
2. High population growth.
3. Under-utilization and primitive stage of technology.
14. Disguised / Hidden This is associated with abundant manpower, when employees
unemployment with very minimal or zero marginal productivity are removed,
it would not affect the total output.
15. Casual In industries where workers are appointed on day to day basis
unemployment such as agriculture, construction, catering etc. have more
chances for unemployment as they recruit employees on a
contract basis can be terminated at any time.
Once the contract of worker ends at specified time, then he
needs to find a new job in the same industry which has started
somewhere else.
Example, in film industry where the junior artist works at times
required.
16. Residual The unemployment that remains in periods of full employment,
unemployment as a result of those mentally, physically, or emotionally unfit to
work.
Examples:
1. Those people who are unable to work because of physical
or mental disabilities.