- Structural Unemployment:
- Caused by fundamental shifts in the economy.
- Workers lack requisite job skills, or jobs are far from workers.
- Mismatch between company needs and worker skills.
- Example: Handloom weavers losing jobs due to machine weaving.
- Cyclical Unemployment:
- Occurs due to cyclical trends in the business cycle.
- Low when economic activity is high (peak), rises when output falls (low).
- Overall demand for labor declines due to business downturns.
- Frictional Unemployment:
- Arises due to people moving between jobs, careers, or locations.
- Also from people entering/exiting the labor force.
- Transitional unemployment, always present in economy.
- Example: A person leaving one job to find a new one.
- Seasonal Unemployment:
- Occurs when people are unemployed at certain times of the year.
- Due to seasonal demand in industries.
- Example: Tourism, farming, sugar factory workers during off-season.
- Disguised Unemployment:
- Part of labor force is without work or working redundantly.
- Overall productivity of labor is very less, marginal productivity is zero.
- Frequent in developing countries with large populations.
- Example: Agriculture sector in India.
- Open Unemployment:
- All those who are not working due to lack of work but actively seek work.
- Clearly visible in society.
- Example: People standing in areas looking for daily work.
Diagram: Types of Unemployment
- Open Unemployment: Visible job-seeking without available work.
- Structural Unemployment: Caused by economic shifts and skill mismatches.
- Cyclical Unemployment: Fluctuates with business cycle peaks and troughs.
- Frictional Unemployment: Occurs during job transitions and information gaps.
- Seasonal Unemployment: Linked to seasonal demand in specific industries.
- Disguised Unemployment: Involves redundant labor with low productivity.