A2 Economics Unemployment

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imemilyx3
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#1
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#1
Can someone thoroughly explain the causes of unemployment? Eg Frictional, structural, cyclical and voluntary.
Especially cyclical Ue and the graphs needed to support it

Thanks in advance!
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FirdousH
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Tutor2u best place tbh
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antony4321
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Frictional i always remember 'F' stand for FROM moving from one job to another. whilst waiting to start a new job someone can become unemployed for a short period of time in which is frictional.

Structural, of of the worst types. caused by a mismatch of skills. For example the UK used to be big in secondary sector eg manufacturing however firms moved abroad because it was cheaper for them. as a result the skills were no longer required. no the UK specialised in services. 'De-industrialisation' good term to use when discussing this type of unemployment and occupational immobility also occurs here.

Cyclical - aka DEMAND DEFICIENT. occurs when demand falls in a particular sector of the economy as a whole.consumers demand less goods and services means that labour is less demanded (note labour is derived demand) therefore workers are laid off as the firms cannot afford to pay them due to falling demand. as a result unemployment increases. diagram would simply be a leftward shift in AD as demand falls, national output can also fall from Y to Y1 and a negative output gap arises.


Hope this helps.
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imemilyx3
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#4
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#4
Thank you!
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jennifer.tariah
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#5
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dont forget real wage unemployment which occurs when real wages increases which results in firms costs of production to increase, resulting in them demanding less labour and causing unemployment to increase.
you can also explain it by saying as real wages increases, the supply of labour increases as there is more incentive to work, therefore those who are not classified as the workforce join the workforce resulting in higher unemployment
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Mike_123
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#6
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#6
(Original post by antony4321)
Frictional i always remember 'F' stand for FROM moving from one job to another. whilst waiting to start a new job someone can become unemployed for a short period of time in which is frictional.

Structural, of of the worst types. caused by a mismatch of skills. For example the UK used to be big in secondary sector eg manufacturing however firms moved abroad because it was cheaper for them. as a result the skills were no longer required. no the UK specialised in services. 'De-industrialisation' good term to use when discussing this type of unemployment and occupational immobility also occurs here.
Structural more generally means labour supply exceeding demand, so can include things that would yield a rigid wage above equilibrium, like a minimum wage.
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