Question

Sources of unemployment

Answer 1

1. Voluntary unemployment - this occurs when people choose to remain unemployed rather than take jobs available.

2. Classical or real-wage unemployment - this occurs when wages in a competitive labour market are pushed above the equilibrium.

3. Cyclical or demand deficient unemployment - cyclical unemployment occurs when the economy is below full capacity.

4. Structural unemployment - this occurs due to a mismatch of skills in the labour market.

5. Frictional unemployment - this is caused by the time people take to move between jobs.