Types of unemployment
The three people described in the following table are categorized as unemployed by the Bureau of Labor Statistics
Identify each person in the table as structurally, frictionally, or cyclically unemployed
Unemployment Type
Carlos recently lost his job as a waiter at a local restaurant. A recent increase in the minimum wage keep:s local employers from adding more of the low-skill positions for which he qualifies, so he has been unable Structural Frictional Cyclical to find work. He continues to look for a job, but he's considering going back to school for vocational training
Deborah just moved with her husband to Portland, Oregon. She's looking for a job as a paralegal
Janet is a real estate agent. House sales in her area have declined because the region has been going through a recession. She has no clients and is currently looking for a new full-time job
The following table shows data on frictional, cyclical, structural, and total unemployment for an economy
Rate
Unemployment Type (Percent)
Frictional 3.3
Cyclical 0.0
Structural 1.0
Total unemployment 4.3
True or False: This economy is not currently at its natural rate of unemployment.
A. True
B. False

Total unemployment is the addition of frictional, structural, and cyclical unemployment. If there is no cyclical unemployment, the economy is at its natural rate of unemployment, equal to the sum of frictional and structural unemployment. In this situation, because cyclical unemployment is 0.0%, the economy is at its natural rate of unemployment.

Also note the following :

Structural unemployment comes from a mismatch between the jobs available in some labor markets and the skills of workers. One factor which brings structural unemployment is institutional factors such as a minimum wage, which holds wages above the marginal productivity of less skilled workers, limiting their employment chances.

Frictional unemployment occurs because job seekers and employers will need some time to locate one another.

This kind of unemployment is usually brief.

Cyclical unemployment is the form of unemployment associated with business cycles. This kind of unemployment rises during recessions and falls during expansions. Because Janet seems jobless because of the recession, she would generally be considered to be cyclically unemployed.