We have discussed three types of unemployment. Cyclical unemployment which is the consequence of transitory reductions in demand for certain goods and services associated with economic contractions. Frictional unemployment occurs during the transition of workers from one job to the next. These unemployment spells are fairly short. And finally, structural unemployment is associated with the secular decline of certain sectors or industries. In this case, workers become unemployed because their set of skills is no longer valued by potential employers.

a) Provide your own example of each type of unemployment.

b) Describe briefly the different policy implications of each type of unemployment.