Unemployment and Labor Force Essay Example | Topics and Well Written Essays - 1000 words

Unemployment and Labor Force - Essay Example According to the economist Edmond Malinvaud, the type of unemployment that prevails at a particular time depends on the situation at the goods market. If the goods market is a buyers’ market in which sales are restricted by demand then Keynesian type of unemployment prevails, while if a production capacity is limited classical unemployment prevails. Common types of unemployment are as follows:1.  Frictional Unemployment: This type of unemployment occurs when a person switches from one job to another. While the person looks for another job he experiences frictional unemployment. This unemployment also applies to fresh graduates who look for jobs. It is a productive part of the economy as it increases worker’s economic efficiency and his long term welfare. This type of unemployment usually occurs due to incorrect information in the labor market due to which workers do not know what type of job they are getting hired for and hence they look for getting a new job. 2.  C lassical Unemployment: This type of unemployment occurs when real wages for available jobs are set above the market clearing level. This usually happens due to government intervention when government sets a minimum wage for a job. Even taboos especially taboos can sometimes cause wages to be set above the market clearing level (America’s Great Depression p45).3.  Structural Unemployment: This type of unemployment occurs due to mismatch between employment offered by employers and those seeking jobs.... Common types of unemployment are as follows: 1. Frictional Unemployment: This type of unemployment occurs when a person switches from one job to another. While the person looks for another job he experiences frictional unemployment. This unemployment also applies to fresh graduates who look for jobs. It is a productive part of the economy as it increases worker's economic efficiency and his long term welfare. This type of unemployment usually occurs due to incorrect information in the labor market due to which workers do not know what type of job they are getting hired for and hence they look for getting a new job. 2. Classical Unemployment: This type of unemployment occurs when real wages for available jobs are set above the market clearing level. This usually happens due to government intervention when government sets a minimum wage for a job. Even taboos especially taboos can sometimes cause wages to be set above the market clearing level (America's Great Depression p45). 3. Structural Unemployment: This type of unemployment occurs due to mismatch between employment offered by employers and those seeking jobs. It may occur due to geographical location or skill of workers or because of many other reasons. If structural unemployment occurs, frictional unemployment becomes significant as well. 4. Keynesian Unemployment: This type of unemployment occurs when there is insufficient demand in the economy. It occurs when there is a business cycle recession in the economy and wages of jobs do not fall to meet the equilibrium rate. An economy with high unemployment rate is an economy which is not using its entire available labor source which reduces its efficiency. If all the frictionally unemployed in this economy accept the first available job to them, then they