DMPQ: What is unemployment? Explain the types of unemployment.

Unemployment is a phenomenon that occurs when a person who is capable of working and is actively searching for the work is unable to find work.

Different types of unemployment are as follows:

  1. Frictional Unemployment:The minimum amount of unemployment that prevails in an economy due to workers quitting their previous jobs and are searching for the new jobs is called Frictional Unemployment
  2. Cyclical Unemployment:Cyclical unemployment is due to deficiency or fall in effective demand from consumers which leads to fall in production and low demand for labour.
  3. Voluntary unemployment:Voluntary unemployment refers to a situation where workers are either not seeking for work or are in transition from one job to another (quitting one job in search of another better job).
  4. Involuntary unemployment:Involuntary unemployment refers to a situation where workers are seeking work and are willing to work but are unable to get work.
  5. Structural unemployment:Structural unemployment refers to a situation which arises due to change in the structure of the economy. Example: An economy transforms itself from a Labour intensive economy to a Capital intensive economy.
  6. Seasonal unemployment:Seasonal unemployment occurs during certain seasons of the year. In some industries and occupations like agriculture, holiday resorts etc., production activities take place only in some seasons.
  7. Disguised unemployment:Disguised unemployment is when too many people are employed than what is required to produce efficiently. This kind of employment is not at all productive.
  8. Under employment:Underemployment is a situation under which People with a higher level of skills are employed in less productive jobs.


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