What is cyclical unemployment?

The problem of unemployment worries all countries, today unemployment is the most pronounced and negative moment for entrepreneurs and workers, with which the entire population of the earth is struggling. What is unemployment? This phenomenon, suggesting the lack of work among the able-bodied population.

Unemployment is of several kinds, but we will consider an example of such a thing as cyclical unemployment . There is a natural type of unemployment in which there is no work due to a lack of jobs. Cyclic unemployment is a kind of unemployment, in which there is a slowdown in economic growth, as well as a moderate decline in GNP. Thus, cyclical unemployment is formed when business activity begins to fluctuate, occurs as a result of the economic recession, and dissipates as business activity and economic growth increase. In other words, it can be said that this type of unemployment occurs when the economy is on the decline, its lowest level is reached at the peak of economic development throughout the country. In general, cyclical unemployment lasts much less than structural unemployment , but it can cover many branches of the economy.

For example, in the United States during the Great Depression in 1929 and until 1933, this type of unemployment reached 25% of the level of decline, that is, every fourth resident is unemployed in this country. And this, in turn, is quite a large number of people. When the demand for services and goods is growing, so is the demand for labor. The decline in production, when there is depression and an industrial crisis, causes cyclical unemployment. In general, in the phase of depression cyclical unemployment causes great strength.

In addition, this type of unemployment is constantly changing in its scale. The market can also be the best and the worst, and therefore the level of cyclical unemployment can cover the entire spectrum of the population. But in most cases, due to the fact that the labor market is different with respect to different categories of workers, women, elderly and young people, as well as non-indigenous people suffer from unemployment. Some conditions for cyclic unemployment to grow can create social security systems. For example, the amount of the allowance given to an unemployed person depends on his previous salary. But the period of payment of unemployment benefits is limited. That's why some entrepreneurs will be best able to fire several of their employees, and then again to hire, than to reduce their salaries.

With cyclical unemployment, the use of production capacity does not take place completely. Usually, the GDP is much smaller than it could be if there was full employment of the population. The difference that occurs between the potentially possible GDP, where there is full employment and between that which was achieved as a result of cyclical unemployment of GDP, and is the gap between GDP. Meanwhile, in the GDP gap and in cyclical unemployment there is a direct, stable link that was established by A. Oaken, as a result of the empirical path. Its law reflects the relationship between the shortfall in the volume of GDP and the level of unemployment. In the event that the actual level is able to exceed the natural level by at least 1%, then the GDP gap will be about 2.5%. Thanks to this attitude, it is possible to calculate any losses that are related to the unemployment rate.

Thus, cyclical unemployment can be generated from the development of a market economy, in other words - the alternation of recession and the rise of production. When there is a general decline in the economy, the work can not be found for any specialty.