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Unemployment (Seasonal (Caused by seasonal fluctuations in economic…
Unemployment
Seasonal
Caused by seasonal fluctuations in economic activity. Is regular, predictable, due to weather cycles/ traditions. e.g. Ski resorts no staffing during off-seasons.
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Can also be reduced by rearranging production process in a way that production is spread evenly throughout the year. Possible if stocks are carried even in off-peak seasons
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Consequences
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Social Impact
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Prolonged unemployment of large masses of people could give rise to mass protests, violence and social unrest
Frictional
Imperfect info available to employers/employee, time is spent to connect employers to job-seekers. Inevitable, not a problem unless the time lag is very long.
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Can be minimised by improvement in industrial relations. Organisational ability of management can be improved to reduce breakdowns and bottlenecks. These help lower number of laid-off workers from strikes and lock-outs or voluntary resignations due to poor stuff management
Cyclical
(Demand deficient unemployment) Occurs due to regular business cycle - booms, slumps, causing a deficiency of effective demand. AD down - D for labour down, increase in cyclical unemployment
Government can use appropriate demand management policies to increase AD. Expansionary monetary and fiscal policies can help to stimulate levels of consumption and investment spending
Supply management policies can be used to an extent. Government can reduce structural rigidities which help to increase SRAS
Structural
Unemployment arising from mismatch of skills and jobs due to a change in the structure of an economy. Due to change in pattern of demand - e.g. sunset industries, shift in demand from coal to other fuels. Due to change in conditions of supply
Tackled by supply-side policies such as upgrading the skills of workforce or using subsidies to manage the change in economic structure
Tax incentives and subsidies can encourage growing industries to move into depressed areas to create employment opportunities in those areas
Real Wage Equivalent
Real wages are forced above market clearing labour. (due to trade unions/wage councils)
Thus, oversupply of labour causing real wage unemployment)
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Measurement
Labour Force = Number Employed + Number Unemployed (Does not include unwilling, or unable to work)
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