what is natural, frictional and structural unemployment? are they same? if not please explain them.

Natural unemployment ​ is the unemployment rate that exists when the economy produces the full employment level of output. It is the unemployment that is caused by frictional and structural factors in the economy. Natural unemployment rate is the sum of frictional unemployment rate and structural​ unemployment rate. 

Frictional unemployment arises due to market imperfections. When people move from one place to another and there may be unfilled vacancies at that place but it will take time to match the job finders and unfilled vacancies. During this time lag, the type of unemployment that arises, is regarded as frictional unemployment.

Structural unemployment arises due to change in demand pattern of goods.When there is increase in demand of any new type of goods and the type of labour so required is not readily available in the market, then the type of unemployment that arises is termed as structural unemployment. For instance, think of the shift in demand from android phones to windows phones. When this shift happened, there was acute shortage of labour who specialised in the production of windows phones, hence, structural unemployment arose.  

  • 0
What are you looking for?