The three people described in the following table are categorized as unemployed by the Bureau of Labor Statistics. Identify each person in the table as structurally, frictionally, or cyclically unemployed.
Unemployment Type
Structural
Frictional
Cyclical
Lucia just moved with her husband to Portland, Oregon. She's looking for a job as a paralegal.
Kenji recently lost his job as a waiter at a local restaurant. A recent increase in the minimum wage keeps local employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. He continues to look for a job, but he's considering going back to school for vocational training.
Sharon is a real estate agent. House sales in her area have declined because the region has been going through a recession. She has no clients and is currently looking for a new full-time job.
The following table shows data on frictional, cyclical, structural, and total unemployment for an economy.
Unemployment Type Rate
(Percent)
Frictional 1.0
Cyclical 0.0
Structural 3.1
Total unemployment 4.1
This economy is not currently at full employment.
a. True
b. False

Lucia just moved with her husband to Portland, Oregon. She's looking for a job as a paralegal. - Frictional

Frictional unemployment includes those people who are in between jobs, like Lucia. These are people who are recently unemployed and are expected to find employment soon, because their skills are wanted.

Kenji recently lost his job as a waiter at a local restaurant. A recent increase in the minimum wage keeps local employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. He continues to look for a job, but he's considering going back to school for vocational training. - Structural

Kenji does not have enough skills, or is not productive enough, to be hired at any wage set above or equal to the minimum wage. Kenji will have to increase his skills in order to get hired, thus, he is in structural unemployment.

Sharon is a real estate agent. House sales in her area have declined because the region has been going through a recession. She has no clients and is currently looking for a new full-time job. - Cyclical

Cyclical unemployment corresponds to unemployment that is directly related to economic cycles, hence the name. When the economy is in a downturn, this type of unemployment rises, and when the economy is expanding, this type of unemployment falls.

Sharon is unemployed because the real estate market in her area is in recession.

This economy is not currently at full employment. b. False

Full employment occurs when the unemployment rate is at the natural rate, which is the sum of frictional and structural unemployment. This means that for an economy to at full employment, cyclical unemployment must be zero, as it is the case in this question.

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