What’s your best method of memorizing the different types of unemployment? Typically I like to relate today’s economy to the economics and try to determine things that way. So with that said, what type of unemployment is mainly prevalent today? Cyclical and Structural?
cyclical is like boom/bust. structure is like structure of the auto industry and how it needs to retool
Cyclical is whats going on right now. So many people are out of jobs, but they will go back to work within a few years. I think about it like this: If I was working at a bank and got laid off because the economy is bad, that is Cyclical because it has to do with the business cycle. If I was working at a bank and I got a new job at another bank but took a few weeks off before I started the new job for a little “me” time, that is Frictional. Friction occurs between 2 objects (aka between jobs). If I got sick of working and wanted to go live on the beach and fish for food and never see another computer again, that is Structural. Structural is why unemployment never goes to 0 because there are people that just aren’t going to work. So Structural and Frictional unemployment happen all the time and are natural. There is ALWAYS some Structural and Frictional unemployment. The problem is (like now) when there is Cyclical unemployment.
Whats going on right now is structural, which is why it will be a very long time before we see employment back down at its ‘normal’ levels, if we ever do, it will probably be at a ‘new normal’ thats higher. frictional = normal, people moving etc, but ppl have skillset to do jobs structural = takes more time, people don’t have skillset to do job cyclical = as we go through boom and bust, this happens Natural Rate of Unemployment (NAR) = Frictional + Structural
We need some clarification here. Matt and I disagree on what the current unemployment situation is. I think that since it is related to the business cycle, it is Cyclical. He says that it is Structural because it will persist. Thoughts?
structural will always be there (structural and frictional is the natural unemployment rate) but the recent wave of lay offs was due to cyclical unemployment because of the recession
lol my way of remembering it was quite funny. My friends and I call ourselves the SF (which stands for sausage fest)… meaning that no chicks chill with us… and its been like that for a long time… so I just remember that the SF will always live on… meaning that there’ll always be (s)tructural and (f)rictional… and cyclical is easy to remember due to the business cycle
I owe you all a thanks…
The type of unemployment we currently see is a hybrid. There are always gray areas as economics is fluid in reality. The more you zoom into a particular industry, the clearer the answer will become.