Module 13

Types of Unemployment

1. Frictional Unemployment

Workers engaged in job search.

2. Structural Unemployment

Unemployment is a result of a surplus in the supply vs demand of labor (at the current wage).
Causes of structural unemployment <- Test Question

• Minimum wage.
• Unions (increase wage rates).
• Efficiency wages.
• Government policies.

3. Cyclical Unemployment

The result of a recession.

Natural Rate of Unemployment/Full Employment

Sum of frictional and structural unemployment.

Actual Rate of Unemployment

Sum of cyclical and the natural rate of unemployment.