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Date Submitted: 03/01/2012 07:12 AM
Unemployment
Economists try to determine the health of economies by monitoring data sets, statistics and indices. Economic data, which are permanently released by the government and statisticians, are a helpful tool to assess the current stage of an economy (e.g., recession, depression). The national unemployment rate, which is released monthly by the Bureau of Labor, is one of the most important economic indicators. This memo will focus on the different types of unemployment, the ways to measure unemployment, the unemployment data itself, and policies that are used to target unemployment.
The different forms of unemployment
Although unemployment as a concept has a negative connotation, there are three types of unemployment, which differ in terms of their impact on the economy.
The first type, frictional unemployment, is the least severe kind of unemployment. According to the website Investopedia.com, frictional unemployment “is always present in the economy, resulting from temporary transitions made by workers and employees or from workers and employers having inconsistent or incomplete information” (“Frictional Unemployment”). Clearly, no tall job seekers have the tools to find the right company. Even people who can access job offers online might not be able to find the right position. However, employers face the same problems. For example, a company might have an open position for a bilingual administrative assistant, but hiring managers may not have the right information to find new candidates to fill the position. Interestingly, this leads to another assumption related to frictional unemployment, which occurs when employers “abstain from hiring because they believe there are not enough qualified individuals available for the job, when actually there are” (Investopedia, Frictional Unemployment).
The second type, structural unemployment, “results from changes in the basic composition of the economy or structural unemployment” (Investopedia,...