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Economic Growth, Unemployment and Inflation: Question 7

Syllabus 4.6

Multiple choice 1 mark

Aiden works as a bank teller but decides to resign because he wants to find a better-paid job elsewhere. He spends three weeks updating his CV, attending interviews and comparing job offers before starting a new position at a different bank.

Which type of unemployment does this describe?

Choose an answer to check it, then compare with the worked solution below.
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Worked solution

Step 1: Recall the four types of unemployment

  • Frictional unemployment: short-term unemployment while a worker voluntarily searches for a new job, e.g. after 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

Aiden’s situation:

  • is a voluntary resignation to look for a better-paid job, not a job loss caused by a recession, this rules out cyclical unemployment.
  • does not involve a permanent industry decline or a skills mismatch (Aiden quickly finds a comparable role as a bank teller elsewhere, using the same skills) this rules out structural unemployment.
  • is not tied to a particular time of year or a repeating annual pattern, this rules out seasonal unemployment.
  • involves a short period of searching (three weeks of applications, interviews and comparing offers) between leaving one job and starting another.

This pattern of voluntarily leaving a job and spending a short time searching for a new one is the defining feature of frictional unemployment\boxed{\text{frictional unemployment}}.

Step 3: Why the other options are wrong

  • A (cyclical): would require Aiden’s job loss to be linked to a general economic downturn, not a personal choice to resign and look for better pay.
  • C (seasonal): would require the job change to follow a predictable pattern tied to the calendar, not a one-off decision to switch employers.
  • D (structural): would require a permanent change removing Aiden’s job or making his skills obsolete, not a voluntary move between two similar roles.

Final answer

  • The scenario describes frictional unemployment, option B.