Unemployment Essay Example | Topics and Well Written Essays - 500 words - 3

Unemployment - Essay Example This increases exposure to malnutrition, disease and depression. An economy with a high rate of unemployment has increased rates of crime and social problems. High unemployment rates can also cause civil unrests and may result in the collapse of an economy (Hobson, 2013). Unemployment is a general term that explains the lack of work by individuals who are willing to work. However, unemployment can be divided into three types. These are cyclical, structural and frictional unemployment. Structural unemployment occurs where the skills required for the available work does not match with the skills of those seeking work. It can also occur due to a long-term decline in demand. Seasonal employment is also a form of structural unemployment because it is associated with certain type of work. Both the occupational and geographical immobility of labor can also cause this type of unemployment. Cyclical unemployment is involuntary and occurs when the aggregate demand in an economy does not match the number of individuals seeking work. In this type of unemployment, there is a reduction in the demands of goods and services, which reduces production, and the number of works needed to satisfy demand. Frictional unemployment occurs where and individual is changing fro m one job to another. This type of unemployment exists in every economy because of the diversity of the skills of the workers as well as the work available. Frictional unemployment also occurs due to the entry of new graduates to the job market (Winkelmann, 2014). There are for major cause of unemployment. These are minimum wage policies, efficiency wages, labor unions and job search. The implementation of minimum wage policies by the government results in the demand of more wages by individuals below the minimum wage level. This results in the demand of more wages by those above the minimum wage level. Because of increased costs in labor, firms will reduce the number of workers in order to