Theories of Unemployment Essay

Unemployment has been explained with different theories and concepts which leads to its various types. Therefore, unemployment is referred to as the state in which people have no jobs, have been actively looking for work in futility and are currently available for work. It also encompasses the people who have been temporarily laid off from work and are waiting to be called back for the job. There are several types of unemployment in the market set up. They include; structural, frictional and cyclical unemployment with the first two making up the rate of natural unemployment (Fluckiger, 2004). The third only arises when there is a drop in demand, and it is normally during the recession. These types of unemployment are discussed below with their respective examples.

Marcelle has been working in an automobile company, and because of the sudden contraction in the business across the country, he is laid off. This is referred to as cyclical unemployment. The cyclical unemployment is not part of the natural unemployment rate. Just as is the case of Marcelle, it results from business contraction due to sudden fall in demand of goods and services affecting the normal operation of the market. In the quest to reducing cost, the management will lay off some workers.

Frictional unemployment occurs when the workers quit their current jobs. This could be because they want to move to a new position, leave voluntarily or have made enough savings and hence decide to resign from the job. The case of Dominic leaving his job as a hairdresser with the intention of moving to New York is a good example of frictional unemployment.

Seasonal unemployment is another form of natural unemployment. This results due to regular seasonal changes. The workers that can be affected by this type of unemployment include; ski instructors, resort workers and the ice scream vendors (Fluckiger, 2004). An example of this type of unemployment is the case of Francine who worked in the ski resort as a part-time worker. He left the job since it was time for summer when the resort closes.

Finally, structural unemployment is another instance which results when shifts arise in the economy creating a mismatch between the workers' skills the employer's requirements (Fluckiger, 2004). An example is the case of Beauvoir who had been working full time as a secretary, but since he has no computing skills, his employer replaced him with another worker who was computer savvy.

From the illustrations above, it can be seen that Marcelle deserves the benefits of unemployment. This is because he has no control of the company losing its markets. Laying off employees on the basis of contraction in the company's market should lead to its management budgeting for their unemployment benefits.

Conclusion

In conclusion, the above concepts of unemployment, i.e. Seasonal, cyclical, frictional and structural unemployment are prevalent in any economy. Unemployment can, therefore, be caused by different factors. Some of the factors which cause unemployment could be due to the company's inevitable circumstances in its market or the employee's personal reasons as revealed in the above examples.

Reference

Fluckiger, Y., Schonenberger, A., & Zarinnejadan, M. (2004). Measuring different types of unemployment. National Journal of Economics and Statistics (SJES), 122(I), 17-35.