UWC in Mostar Academic year 2007 / 2008 ECONOMICS Standard Level – Second Year Azra Bajramović

MACROECONOMICS Types of Unemployment We must distinguish between different kinds of unemployment. In general, depending on the cause of unemployment, we can talk about:  seasonal  frictional  structural and  cyclical unemployment.

MACROECONOMICS Types of Unemployment Seasonal Unemployment Unemployment that varies with the seasons is called seasonal unemployment. Examples of seasonal unemployment can be find in the following industries: agriculture forestry fishing tourism etc.

MACROECONOMICS Types of Unemployment Frictional Unemployment Some people are unemployed as a part of normal transition from one job to another. That is frictional unemployment. Examples of this kind of unemployment: young people entering the labour force people leaving jobs in search for a better one etc.

MACROECONOMICS Types of Unemployment Structural unemployment Examples of structural unemployment can be found in the case of: sunset industries technological unemployment In many industrialized countries there has also been a decline in manufacturing and construction accompanied by tremendous growth in the service sector. Structural unemployment is a kind of long-term unemployment that often results from structural sectors in the economy. Quite often this kind of unemployment is found side by side with job vacancies because unemployed lack skills required for newly created jobs.

MACROECONOMICS Types of Unemployment Cyclical unemployment That is unemployment that increases when economy goes into slowdown and decreases when economy goes into a boom.

Real Wage Unemployment If labour unions or minimum wages hold the real wage above equilibrium, or if there is an economy wide rise in real product wages, some firms will not be able to cover their labour costs and will shut down, leading to unemployment. MACROECONOMICS Types of Unemployment

MACROECONOMICS Types of Unemployment QUESTIONS FOR DISCUSSION:  What types of unemployment you found to be dominant in countries you have explored?  Can you name similarities and differences between transitional and developed economies?  What are similarities in countries in transition?  What are similarities in developed countries?  What about differences?  What else you found to be important?