Causes and effects of unemployment on an individual/family - Research Paper Example

More specifically, unemployment has a potent influence on the economy of the country and, consequently, people’s both well-being and health, and this means that this issue and the problems it causes individuals should be paid a proper attention. There are four main types of causes of unemployment: seasonal, frictional, cyclical, and structural. The first two of them are regarded as non-troubling causes as far as no policy needed to regulate the issue. Seasonal unemployment takes place when predictable seasonal changes in labor demand occur.

This means that one has no job because of a wrong time of year. Frictional unemployment results from people moving between jobs. It means that in reality there is a job for the unemployed person but he / she has not find this job yet. The other two causes, namely cyclical and structural, are troubling. Among the two of them, it is the cyclical one that is regarded as the key cause of unemployment (Loungani, 2010). Cyclical unemployment (also referred to as demand-deficient unemployment and Keynesian unemployment) occurs when the fall in demand for goods and services takes place.

As a consequence, businesses contract resulting in an increase of redundancies and worker lay-offs. The unemployed have less money to spend, and this fact causes businesses to contract even more with all the ensuing consequences (more unemployment). Overall, the fall in demand is a very important cause of the increase in unemployment; but it is not the sole one; in fact, it is a combination of two troubling causes, cyclical and structural. Structural unemployment is created when there is a gap between what is required for the open job opportunities and qualifications and skills of the unemployed.

It can also be in a place where the qualified workers are available but there are no vacant positions for them. For example, structural unemployment takes place in on-line banking when workers are replaced by computers. In accordance with Loungani (2010),