Distinguish frictional unemployment, structural unemployment and cyclical unemployment
Frictional unemployment: Frictional unemployment occurs when individuals are between jobs or are seeking new employment opportunities. This type of unemployment is generally short-term and is considered natural in a healthy economy where workers are constantly moving between jobs that best suit their skills and preferences.
Structural unemployment: Structural unemployment is caused by mismatches between the skills and qualifications of workers and the available job opportunities in the economy. Structural unemployment is often a long-term phenomenon that requires retraining or education to address the skills gap between workers and available job opportunities.
Cyclical unemployment: Cyclical unemployment is caused by fluctuations in the business cycle, leading to periods of economic downturn and reduced demand for labor. During economic recessions or depressions, businesses may lay off workers or reduce hiring, leading to an increase in cyclical unemployment. This type of unemployment is typically temporary and will decrease as the economy recovers.