Frictional and Structural Unemployment

In examining the situation in the labor market and the conduct of economic policy, it is important to distinguish several types of unemployment, as the measures for its reduction are dependent on its type.

Basic types are: friction, structural, and unemployment due to lack of demand or cyclical and natural.

In addition to these there are also hidden or latent, voluntary and technological. The main factor for their size and movement of the market developments. The following is a description of frictional and structural unemployment.

Frictional unemployment occurs due to continuous rotation of service people who are normally employed, but tend to change the working environment. It is almost inevitable, since it is only theoretically possible that all occurring in the labor market, complete information on job vacancies and job seekers. Workers choose jobs that best suit them, as well as employers. Such unemployment is treated as a temporary, short-term, it may take from one day to several months. Perseverance and commitment to job search, job creation and how it can be seen as an opportunity, are the factors that affect the length of time. A person seeking work should find a job corresponding to type of education, skills, geographic location, working conditions, etc.. Which is not so easy. It is the result of voluntary decisions by individuals and not tied to economic conditions, therefore this kind of unemployment is voluntary. Caused by seasonal and periodic changes in production, in which the labor market does not react quickly enough. As soon as the individual decide to start looking for a job, until he/she finds it.

Friction unemployment is affected by the efficiency of the labor market, and friction of it, economic situation, the scope of the rights of the unemployment insurance scheme, the flow of information on job vacancies and job seekers; lower the flow, the greater the friction.

Structural means a mismatch between demand and supply of labor. Working skills of job seekers do not meet the requirements of job vacancies as a result of economic and technological development (rapid growth or decline of certain sectors or industries and the emergence of new industries). The demand for some type of work is also increasing, on the other hand decreases, but can not be quickly adjusted (increased demand for computer specialists and informatics and a decline in demand for unskilled and semi-skilled workers in the textile industry and coal). The most commonly comes to disparities in occupations, education level and geographical distribution of jobs and job seekers. If labor mobility is inadequate, the geographical mismatch is big, it is difficult to eliminate and in consequence of certain regions of high unemployment.

Structural unemployment differs from frictional and cyclical in that, that it must be covered by structural unemployment with inadequate vacancies.

Structural is the slow and difficult adjustment between supply and demand for labor and reducing them is a long-term process.

Source by Ivek Makavski