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 is a phenomenon that implies a lack of work among the able-bodied population.
Unemployment can be of several types, but consider an example of such a concept as cyclical unemployment . There is a natural type of unemployment in which there is no work due to a lack of jobs. Cyclical unemployment is a type 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 an economic downturn, and dissolves when business activity and economic growth rise. In other words, we can say that this type of unemployment occurs when the economy is in decline, its lowest level is reached at the peak of economic development throughout the country. Basically, cyclical unemployment lasts much less than structural unemployment , but it can cover many sectors of the economy.
For example, in the USA during the Great Depression in 1929 and 1933, this type of unemployment reached 25% of the decline, that is, every fourth resident became unemployed in this country. And this, in turn, is a fairly large number of people. When demand for services and goods grows, so does demand for labor. The decline in production, when there is depression and the industrial crisis, causes cyclical unemployment. In general, in the phase of depression, cyclical unemployment is very powerful.
In addition, this type of unemployment is constantly changing in 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 in relation to different categories of workers, women, elderly and young people, as well as non-indigenous people suffer from unemployment. Some conditions for cyclical unemployment to increase can create social security systems. For example, the amount of the allowance that is given to an unemployed person depends on his previously received salary. But the period for the payment of unemployment benefits is limited. That is why it is best for some entrepreneurs to fire several of their employees and then take them back to work than to lower their wages.
With cyclical unemployment, the use of production capacity is not fully implemented. Typically, GDP is much less than it could be if there was full employment . The difference that occurs between the potentially possible GDP, where full employment is going on, and between the one that was achieved as a result of cyclical unemployment of the GDP, is the gap between the GDP. Meanwhile, in the GDP gap and in cyclical unemployment there is a direct stable connection, which was established by A. Ouken, due to the empirical path. His law reflects the relationship between lost GDP and unemployment. In that case, if the actual level is able to exceed the natural level by at least 1%, then the lag in GDP will be about 2.5%. Thanks to this ratio, any losses that are related to the unemployment rate can be calculated.
Thus, cyclical unemployment can be generated from the development of a market economy, in other words, by alternating a decline and an increase in production. When there is a general recession in the economy, they cannot find work in any specialty.