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Frictional, Structural, or Cyclical Unemployment

The following are stats for the unemployment rates for five different groups during the months of Aug. 2005 and Aug. 2006. I need to know what would cause the shift in % for each group and if each group is a form of frictional, structural, or cyclical unemployment and why.

1. unemployment rate, bachelors degree and higher, 25 years and older
August 05: 2.1%
August 06: 1.8%

2. unemployment rate, some college, 25 years and older
August 05: 3.6%
August 06: 3.7%

3.unemployment rate, high school diploma and no college, 25 years and older
August 05: 4.5%
August 06: 4.7%

4. Unemployment rate, full time male workers over 20 years old
August 05: 5.9%
August 06: 4.1%

5. Unemployment rate, full time woman workers over 20 years old
August 05: 5.6%
August 06: 4.3%

Solution Preview

The key to this assignment is the recognize that the US economy has been growing over the last year (see http://www.house.gov/budget/econup051506.pdf). So, any change in unemployment since 2005 is likely due to a reduction in cyclical unemployment.

1. This group is skilled, and is affected mostly by frictional unemployment. This is a voluntary unemployment of short duration, generally occurring when workers are changing jobs. It arises because ...

Solution Summary

Demographic information is used to determine which type of unemployment is occurring.

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