Forms of Unemployment

There are three basic forms of unemployment:

Frictional unemployment arises from the "normal"* process of turnover in the labor market: as new workers enter the market and search for work, and as existing workers quit one job to look for a better one.

Cyclical unemployment is that which varies with business conditions; for example, workers are laid off when business is bad - then rehired when conditions improve. Closely related to cyclical unemployment is Seasonal unemployment (sometimes considered a fourth category in itself); seasonal unemployment occurs in agriculture, construction, and other industries that are more active at some times of the year than at others. Seasonal unemployment is predictable; cyclical unemployment is not.

Structural unemployment, caused by imperfect labor-market adjustment, is the most intractable of the main types: workers and resources do not move freely to places where they are needed. Many workers who lost their jobs in the coal indu

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ter Monetarist/"New Classical" economic theories that are politically au courant, and to address issues that have arisen since the 1970s - issues which Keynes himself neglected to consider, such as "stagflation". Since practical politics, Keynesian theory, and post-Keynesian economics are all part of the contemporary dialogue on unemployment, we will consider them as one here. So, too, with Monetarism. Just as with Keynes, Milton Friedman established the theoretical foundation for Monetarism with two important books: A Monetary History of the United States (1963), written with Anna J. Schwartz, and Capitalism and Freedom (1962). Unlike Keynesian economics, though, monetarist theory came before the practical applications - which began being considered in earnest in the 1970s, in response to that same unexpected condition of "stagflation" mentioned above. At the same time, it must be pointed out, Monetarism is ideologically connected to the "Neoclassic" or "New Classical" schools of economic theory; both derive their impetus from the "Classical" School of "laissez faire" capitalism dating from David Ricardo's prototypes in the mid-19th century. In addition, Friedman's monetarism is considered the cornerstone of the "Chicago
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