Unemployment Theory

Unemployment Theory explores the reasons behind individuals being jobless despite seeking work. Key factors include economic conditions (like recessions), skills mismatches (where workers’ abilities don’t align with job demands), and structural changes in industries (like technology replacing jobs). It also examines cyclical unemployment, influenced by the overall economic cycle, and frictional unemployment, which occurs as people transition between jobs. Understanding these elements helps policymakers create strategies to reduce unemployment and support economic growth, ensuring that more people can find and keep jobs.