Question

1. Name That Unemployment

Classify the people described in each of the following scenarios as either frictionally, structurally, or cyclically unemployed.

1. Phil is currently unemployed because the tire factory where he used to work installed robots, which replaced 500 laborers, including Phil.
2. Jessica is unemployed because she is in the process of reentering the labor force after taking time off to have a baby.
3. Mary is unemployed because she lost her job at McDonald’s after the province increased the minimum wage.
4. Barry is unemployed because he was laid off by the automobile factory when the economy entered a severe, prolonged recession.
5. Sandy left her former job at an accounting firm a month ago. She is in the process of interviewing for a similar position at six different accounting firms, although she has not yet accepted a job.

Answer 1

Cyclical unemployment occurs due to the business cycles. During boom or expansion period, the demand for workers is very high and during the contraction period workers are laid off.

Frictional unemployment is normal turnover that occurs because it takes time for workers to find new jobs. Once a person changes jobs, it takes time to find a new job.

Structural unemployment is the mismatch between the labor skills required and what is available. Technological advancements and jobs moving oversees are causes for structural unemployment.

a) Structural unemployment because Phil was laid off due to technological improvement.

b) Frictional unemployment because this it takes time to find a new job.

c) Structural since raising minimum wages is structural.

d) Cyclical since recession is one of the business cycles.

e) Frictional because it takes time to find a new job.