ECON 104 Lecture Notes - Lecture 6: Frictional Unemployment, Unemployment, Business Cycle
29 Jul 2016
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Surfing instructors in the winter: frictional: Can be thought of as a result of imperfections in the labor market. Takes time to match available jobs with those seeking jobs. Can also be thought of as the price of making the labor market work. We tend to concentrate on outcomes and to ignore the process of reaching that outcome. It is because some people are willing to refuse job offers and accept temporary unemployment instead that the market is able to reach equilibrium. Frictional unemployment is basically voluntary: structural: The pattern of demand is always shifting in the nation"s labor markets. Some occupations are declining while others are expanding. Some regions are shrinking while others are growing. Structural unemployment results when it is very costly for labor market to adjust to such changes. Ex: appalachian coal mining, detroit: cyclical: When demand for final product falls, demand for labor falls.
