Unemployment

    

This week I would like to discuss about the causes of unemployment. The definition of unemployment is people who are at the working age but not getting a job and actively seeking for a job. Without our concern, a lot of people out there are unemployed because of three reasons:

·        Frictional unemployment

·        Structural unemployment

·        Cyclical unemployment

     Frictional unemployment or search unemployment happens when someone who want to find a better job that suit his interest and it relates to the time taken to search for new employment. It especially happens towards graduate students and people who want to change jobs. Eventually, frictional unemployment will happen continuously because people would like to find job that suit their interest and also higher wages. In addition, it takes a lot of time finding job since they have to compete with other people who maybe have better qualification and do well in interview session. Frictional unemployment is not necessarily inefficient because it is better to wait in order to find the right job rather than a PhD student to work as a clerk.

     Structural unemployment or skills gap occurs when mismatch between the skills that workers in the economy can offer and the skills demanded of workers by the firms. Technological advances is one of the factors structural unemployment to happen. When the firms buy the capital like robot to be the labor which means the firms use capital intensive rather than labor intensive, the demand for workers fall and thus unemployment rate will rise. Other than that, when a firm offer job and the workplace is far from our hometown, it will cause the people uninterested in taking that jobs. Thus, unemployment rate will increase.

     Cyclical unemployment or demand deficient unemployment happens when the economy is below full capacity. Workers lose their jobs because demand for the goods and services fall and only less output would be produce. Firms will care about the profits. If the profits less than cost of productions, the employers will fired the workers. The firms may shut down if they do not fired their workers since they cannot afford to pay wages to the workers. In order to achieve equilibrium, the firms need to demand less workers. Thus, the unemployment rate would rise again.

     I hope this post can help you to figure out the causes of unemployment. Hence, you can create a better future and avoid being unemployed.

Thank you.

By : Syarah Alya

Sources: 

http://www.economicshelp.org/macroeconomics/unemployment/causes/