Unemployment and Cost-Push & Demand-Pull Inflation

Paper Summary:

This paper deals with examination of the four types of unemployment - frictional, structural, cyclical, and seasonal. It also examines the issues of full employment and natural rate of employment. This is then followed by an explanation of the causes and effects of demand-pull inflation.

From the Paper:

"Unemployment rate is one of the indicators of the labor market and economic condition of a country. According to McTaggart et al, one is considered unemployed if they are job losers, job leavers, or labor force entrants and re-entrants (1999: 31.7). There are four types of unemployment, including frictional, structural, cyclical, as well as seasonal. Two of the many factors that lead to unemployment include the processes of job matching (a two-sided process of linking the right worker with the right job) and job rationing (the practice of paying employed people a wage that creates an excess supply of labor and a shortage of jobs ) (McTaggart et al, 1999: 31.10). Employers take time for their search process because this process is influenced by employment protection laws, which induce employers to more carefully consider any hire."

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