CAUSES OF UNEMPLOYMENT Flashcards
What is voluntary unemployment
Unemployment is regarded voluntary when a worker decides to leave a job to search for another position.
What is involuntary unemployment
Involuntary unemployment, on the other hand occurs when a worker is laid off from their place of work(perhaps there is not enough demand for their serivces, or for other reasons such as buisness restructuring
What is frictional unemployment
A relatively short term form of joblessness when a worker is between jobs
Frictional employment is likely to be of short duration which is
less than three months
Why is frictional unemployment also known as search unemployment
It is called search unemployment, because finding a suitable job involves ‘search costs’ - and the time and effort involved in finding a job or suitable canidate
Why is there costs for individuals and the economy due to frictional unemployment
It has costs for the individual involved and for the economy(lower productivity), but it is beneficial if the search process leads to better outcomes for workers and their employers
An example of frictional unemployment
An accountant, for example, might work in a suburban practice that deals with small business and taxation matters, yet be seeking a position in a centrail buisness distrct frim that does more advisory work with larger companis. She might have to leave the first job to devote enough time to finding a more suitable one
Reasons for frictional unemployment
- people unhappy in their current position seeking better pay/conditions.
- People seeking a job closer to their house.
- People re-joining the workforce after taking time off.
- School leavers trying to find their first job.
Frictional unemployment during the downturn/contraction(edit, idk whether contraction or trough)
During a downturn, people are probably are more reluctant to to leave a job if they think they it will be difficult to find a new one
Frictional unemployment during the upturn
We would expect more job search in a strong economy. As we will discus, job search is a key reason why unemployment never actually gets to zero
