Structural Unemployment

Mr. Miner was involved in coal mining industry in California in the past but since the decline of mining industry, he lost his job. There has been a permanent fall in demand of miners due to the advanced technology brought a mining machine and made the human miners obsolete. He tried to look for another job but he lacked skills. He lacks the occupational mobility as mining is his only skill. One day, his wife suggests him to participate in an apprenticeship programmes or an adult retraining programmes arranged by the government to learn new skills. Mr. Miner is definitely willing to take part in.

Demand-deficient unemployment/ Cyclical unemployment

Ms. Employ-me reads this morning that economy is presently in slower growth. She also finds out that such downturn created a decrease in consumer's demand of goods and services and further led to a fall in supply by the firms. Thus, the firms reduced the number of employees as there was a fall in production. The unemployment rate has increased. Ms. Employ-me finally realizes why she was fired. She used to work at bread producing firm and after reading the newspaper, she is pretty certain that her dismissal was due to the economy. Then what is the government doing? She does not know much about economy but she knows it is the time for government to come up with fiscal policies to increase the aggregate demand of the labor and reduce the unemployment rate. She wants to work again.

Frictional Unemployment

Mrs. Wantbetter used to be a nurse but she quited her job and decided to look for another. It is not as easy as she thought since she has been in 'between jobs' state for a year. It is not that she does not have a good access to information about new jobs but she just can't find a satisfying job. However, now she is mad to find out that the government is planning to lower unemployment benefits. It is to make people like her get jobs as soon as possible and to activate the flow of market.But  Mrs. Wantbetter feels like she is being forced. To make it worse, if unemployment benefits are reduced, her son who has just graduated college and is looking for a job, would be forced as well!

Seasonal Unemployment

Mr. Summerlike is a swim instructor in Hawaii. While he is busy teaching people during the summer, he has nothing to do for the winter, as there is a critical decrease in the demand of swim instructor like him during such cold season. People do not want to learn swimming in cool water when the weather itself is 'cool' enough. Therefore, the demand for swim instructors is outnumbered by the supply of workers, creating surplus of workers. Mr Summerlike is now under great stress because he heard that the government is planning to reduce unemployment benefits to encourage 'part season workers' like him. He thinks the government should first give more job information and then take planned action. He finds it difficult to look for another job that he can work for only one season a year.

Real-wage unemployment

Mr. Freenow wants to work at a restaurant that pays him $10 an hour. This amount is what the government of his country sets as a minimum wage. However, it is way more than equilibrium wage, $5 an hour. So, Mr. Freenow has to compete with many other people who also want to apply for this job that pays them more than equilibrium wage. This results in a great competition, and unfortunately, Mr.Freeman is rejected. There are bunch of rejected people since the restaurant only chooses one person. The high minimum wage causes greater aggregate supply of workers including Mr.Freenow than aggregate demand by the restaurant and results in surplus of labor. Therefore, Mr. Freenow is still free of work. He is complaining that the government should abolish or at least reduce the minimum wage that attracts too many competitors. Right now, he is too frustrated to consider low-income workers who may be greatly damaged if the minimum wage is decreased.

1.

I have only studied Economics for about a year but I found it very interesting and challenging. It is the subject that I could directly relate to the real life thus helped me to better understand the world around me. I was excited to find out that I could understand (although roughly) what the economic articles were talking about!

At first, I chose to take IB Economics since I had no other subject to choose from but that was an excellent choice. The course was demanding but worth taking. I am expecting a challenging year.