Unemployment: Types and Effects
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Unemployment: Types and Effects

What are the 4 types of unemployment? What are its effects?

The problem of unemployment are not new and they do exist everywhere. Even the industrial countries - which are considered the riches countries - have not been spared from the destructive implications of unemploymen. However, in the less developed regions of the world like Africa, Asia and Latin America, the problems of unemployment are more serious and deep-seated. In the rural areas of the poor countries, unemployment is more widespread, particularly disguised unemployment. This is a situation where individuals are actually working but they do not contribute to production. For example, there are five farmers who work in a one hectare farm, and together they produce 80 cavans of palay. Three more farmers help the five farmers in cultivating the one hectare farm but the total output is the same - 80 cavans.

There are various causes of unemployment such as changes in technology, renovations, business cycles, and seasons. Some of these causes are temporary in nature. However, there are types of unemployment which have become persistent.

Types of Unemployment

1. Frictional Unemployment. This is caused by interruptions in production for technical reasons, or when workers are temporarily laid off due to renovation works. It is also a situation when workers left their jobs and are looking for new ones.

2. Structural Unemployment. A change in technology renders the skills and talents of some workers obsolete. For example, the introduction of modern machines in agriculture or the use of modern computers in offices may reduce the number of workers.

3. Cyclical Unemployment. This is caused by the fall of business activities in the economy. When aggregate demand decreases, production subsequently declines. Some workers have to be laid off.

4. Seasonal Unemployment. During slack periods, many workers in farming and construction are laid off.

Effects of Unemployment

Unemployment has both economic and social implications. When there is an unemployment, the productive resources of the economy are not fully used. This means less goods and services are produced. To the individuals who are unemployed or part-time workers, it is a great loss of income. They could have earned more, and with their earnings they have more chances to improve their economic conditions. On the part of the country, unemployment means a decline in national income or gross national product. Under such situation, government revenues likewise fall. Evidently, the government has to put aside some of its important projects due to lack of funds. In most cases, it has to borrow money from foreign sources to be able to pursue its development objectives of for economic recovery program.

A job provides hope for material and social advancement. If there is no real hope for re-employment in the near future, not a few jobless people develop an attitude of frustration. This may lead to loss of self-confidence or to more serious social crimes.; These are the people who easily become responsible to appeals of revolutionists. Obviously, with their miserable conditions, democracy has no more meaning to them. Physical survival is most important.

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Comments (2)

A very informative article James.

I did not know those types of unemployment. Well-done!