2.1.3 Unemployment (d-f)

Question 1

Structural Unemployment

Answer 1

🔹 Occurs when there is a mismatch between workers’ skills and the jobs available.
🔹 Caused by changes in industry (e.g., decline in manufacturing, rise in tech jobs).
🔹 Often long-term and worsened by geographical immobility.

Question 2

Frictional Unemployment

Answer 2

🔹 Short-term unemployment when people move between jobs.
🔹 Includes graduates looking for their first job or workers resigning for better opportunities.
🔹 Can be reduced with better job information.

Question 3

Demand Deficiency & Cyclical Unemployment

Answer 3

🔹 Occurs when demand in the economy falls, leading to job losses.
🔹 Linked to economic recessions (e.g., 2008 financial crisis).
🔹 Keynesian economists argue for government intervention to boost demand.

Question 4

Seasonal Unemployment

Answer 4

🔹 Unemployment due to seasonal demand changes.
🔹 Common in tourism, agriculture, and retail (e.g., ski instructors, fruit pickers).
🔹 Workers often seek alternative jobs in off-seasons.

Question 5

Real Wage Inflexibility

Answer 5

🔹 When wages are too high, employers hire fewer workers.
🔹 Minimum wage laws and trade unions can contribute.
🔹 Classical economists argue that reducing wages could solve this issue.