Economic Growth, Unemployment and Inflation: Question 1

Worked solution

Step 1: Recall the four types of unemployment

• Frictional unemployment: short-term unemployment while a worker searches for a new job, e.g. after voluntarily leaving one job to look for a better one.
• Structural unemployment: caused by a permanent decline of an industry, or a mismatch between the skills workers have and the skills employers now need.
• Cyclical unemployment: linked to the ups and downs of the whole economy, rising during a recession when total demand falls.
• Seasonal unemployment: caused by regular, predictable changes in demand for labour at certain times of the year.

Step 2: Match the scenario to a type

The ski instructor’s job loss:

• happens at the same time every year (once the snow season ends), not at an unpredictable point tied to a general downturn, this rules out cyclical unemployment.
• is not the instructor choosing to leave and search for a different job, this rules out frictional unemployment.
• is not a permanent loss of the job or industry (the same hotel re-employs the same worker every winter, so there is no lasting mismatch of skills) this rules out structural unemployment.
• follows the calendar: work is only available in the winter tourist season, and the instructor is laid off and re-hired each year in a repeating cycle.

This regular, calendar-based pattern is the defining feature of $\boxed{\text{seasonal unemployment}}$.

Why the other options are wrong

• A (cyclical): would require the job losses to track a general economic downturn across many industries, not just one seasonal closure.
• B (frictional): would require the worker to be voluntarily between two different jobs, not waiting to return to the same one.
• D (structural): would require a permanent change, such as the resort closing for good or ski technology needing different skills, not a scheduled seasonal closure.

Final answer

• The scenario describes seasonal unemployment, option C.