Frictional Unemployment

This type of unemployment occurs when workers leave their old jobs but haven’t found a new one yet. This happens mostly when workers look for a better job. This type of unemployment make it difficult to reach the goal of full employment.

Structural Unemployment

The type of unemployment happens when there is a mismatch between what the employer expects and what employees have. Mostly due to change of technology, for example with the introduction of computer, those works done by typewriters were shifted to computers.

Cyclical Unemployment

During the contraction phase of business cycle, the demand for goods reduces, so in order to cut down the cost companies end up in reducing the number of employees. Such unemployemt is Cyclic Unemployemnt.

Seasonal Unemployment

The name says it all, unemployment due to change in season. Farmers during non harvest time, resort workers during off season, ice cream vendor during monsoon.

Classical Unemployment

Popularly known as Induced unemployment or Real wage unemployment. It occurs in one of these three situations:

  • when Trade Unions negotiate higher salaries and benefits.
  • Due to the recession, the agreed amount to be paid by the management has hiked.
  • The government sets a minimum wage that’s too high.


Underemployed workers have jobs, but they aren’t working to their full capacity or skill level. To satisfy the basic needs underemployed workers would have end up in doing jobs which is below their real skill.

Voluntary Unemployment:

Voluntary unemployment happens when people are unwilling to work at the prevailing wage rate, it also includes people who are lucky enough to get a continuous flow of unearned income from their unemployed status. Jobs are available for them but they do not want to accept them.

Chronic Unemployment:

Long term uneployemnt prevailing in a country is known as “chronic unemployment.” Underdeveloped countries suffer from chronic unemployment on account of the vicious circle of poverty.


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