Unemployment

unemployment comes about when workers who want to work are unable to find jobs. There are
several types of unemployment and affect the economy of a country.

The most frequent measure of unemployment is the unemployment rate, which is the number of
unemployed people divided by the number of people in the labor force. More unemployed workers
mean less economic production will take place than might otherwise. High, persistent
unemployment can signal serious distress in an economy and even lead to social and political
upheaval.

Unemployment is divided into two broad categories, voluntary and involuntary. Voluntary
employment is a type of employment whereby a person has left his job willingly in search of other
employment. Involuntary is where a person has been fired or laid off and should look for another
job. Economist classify the other types of unemployment under involuntary and voluntary which
include,

Classical unemployment

It occurs when real wages for jobs are set above the marketing-clearing level.

Cyclical unemployment

Occurs when there is not enough aggregate demand in the economy to provide jobs to those who
want to work.

Frictional unemployment

Frictional unemployment occurs when people voluntary change jobs within the economy.

Structural unemployment

Structural unemployment comes about through technological change in the structure of the
economy in which labor markets operate.

Seasonal unemployment

Seasonal unemployment exists because certain industries only produce or distribute their products
at certain times of the year.

Consequences of unemployment

Long term unemployment can lead to financial instability or poverty, which can also cause physical
and mental health problems. When many people are unemployed ,they have less money to spend
until they secure a job. Lower consumer spending reduces business revenue ,which forces
companies to cut more payroll to reduce their costs.

Conclusion

Adam Hayes hits the nail at the head when he says that unemployment occurs when people who
are available and looking for work are unable to find a job. It impacts not only individuals ,but also
communities, regions, and the overall economy. Unemployment can harm growth because it is a
waste of resources, generates redistributive pressures and subsequent distortion; drives people to
poverty; constrains liquidity limiting labor mobility, and erodes self-esteem promoting social
dislocation, unrest and conflict.