Question

Answer questions 24 through 29 by using one of these three choices: a) frictionally unemployed b) structurally unemployed c) cyclically unemployed Ella Jillian Fosnough, an autoworker who is still out of work two years after her plant closed, is _____.

Short answer

Ella Jillian Fosnough is \(b) \) structurally unemployed.

Step-by-step solution

Understand the different types of unemployment

Let's start by defining each type of unemployment: a) Frictional Unemployment: This occurs when people are temporarily transitioning between jobs or searching for new jobs. It is mainly due to the time taken for job search and job mismatch. b) Structural Unemployment: This occurs when there is a mismatch between the skills and job opportunities available in the market. It can be due to technological advancements, changes in industries, or other long-term shifts in the economy. c) Cyclical Unemployment: This occurs during periods of economic downturn or recession. When the overall demand for goods and services decreases, businesses reduce their production and workforce leading to an increase in unemployment.

Analyze Ella's situation

According to the provided information, Ella is an autoworker who has been out of work for two years after her plant closed.

Choose the appropriate type of unemployment

Given Ella's situation, it seems that her unemployment is not temporary or due to an economic downturn. Since her plant closed, it implies that there has been a change in the industry structure or requirements, resulting in her job loss. Based on the definitions in Step 1, Ella is experiencing structural unemployment. Answer: Ella Jillian Fosnough is \(b) \) structurally unemployed.

Key concepts

Frictional Unemployment

Frictional unemployment is a natural aspect of a healthy economy. It arises when individuals are in between jobs or are entering the workforce for the first time. For example, new college graduates searching for their first job or a professional moving to a different city for personal reasons and looking for a new position both experience frictional unemployment. This temporary condition is generally short-term and not seen as problematic, as it often represents people voluntarily changing their employment or career paths.

Effective strategies to reduce frictional unemployment include improving job matching services, enhancing labor market information to connect job seekers with hiring companies, and encouraging flexible working conditions to accommodate transitions. It is important to understand that frictional unemployment is dissociated from economic recessions and is, in fact, a sign of dynamic labor market activity.

Structural Unemployment

Structural unemployment occurs when there's a fundamental change in the economy that affects the ability of certain groups of workers to find employment. The causes include technological advances, outsourcing to other countries, or changes in consumer preferences which lead to some skills being in lower demand. This kind of unemployment can be long-term as it requires workers to retrain or acquire new skills to be employable in the evolving job market.

To address structural unemployment, governments and organizations may offer retraining programs or education subsidies to help workers adapt to new industry demands. It's also beneficial to encourage entrepreneurship and support for industries of the future. Understanding structural unemployment helps explain situations like that of Ella Jillian Fosnough, who experienced job loss due to her plant closing, a sign of shift in the industry she was involved in.

Cyclical Unemployment

Cyclical unemployment is directly related to the economic cycle of a country. During a recession, demand for goods and services falls, leading companies to reduce their workforce, thus increasing unemployment. Conversely, in times of economic growth, unemployment tends to drop as companies expand production and hire more workers.

Economic policies such as stimulating aggregate demand, reducing interest rates, and investing in public projects can help mitigate cyclical unemployment. Since it's tied to economic performance, this type of unemployment may offer indicators of how the economy is doing overall. Recognizing cyclical unemployment is crucial for policymakers and economists looking to stabilize the economy and reduce the impacts of economic downturns on employment.