1. Causes of unemployment

2. Types/Causes of Unemployment
Frictional
Structural
Demand deficient, cyclical
Real wage inflexibility
Seasonal

3. Frictional Unemployment
always some
new graduates
newly redundant
career changers
due to imperfect information
must bring jobs & workers together

4. Structural Unemployment
Mismatch between workers & skills required
capital-labour substitution
long-run decline in an industry
technological change
requires retraining
must bring jobs & workers together

5. Demand deficient or cyclical unemployment
due to economic downturn
lack of demand
in the economy
redundancies
associated with recession
requires  total demand

6. Seasonal Unemployment
Some jobs are more focused on certain seasons
tourism
farming / fishing
public services (gardening, snow removal)
requires matching up of skills, & opposite season jobs

7. Real wage inflexibility
real wages above market equilibrium P
S labour
Min Wage
D labour Qd Qs Q
excess supply of labour = unemployment:
firms don’t want as many workers at the higher wage

8. In pairs work out what kind of unemployment these are