Unemployment occurs when people are without work and actively seeking work. The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force. During periods of recession, an economy usually experiences a relatively high unemployment rate. According to International Labour Organization report, more than 197 million people globally or 6% of the world's workforce were without a job in 2012.

There remains considerable theoretical debate regarding the causes, consequences and solutions for unemployment. Classical economics, New classical economics, and the Austrian School of economics argue that market mechanisms are reliable means of resolving unemployment. These theories argue against interventions imposed on the labor market from the outside, such as unionization, bureaucratic work rules, minimum wage laws, taxes, and other regulations that they claim discourage the hiring of workers.

Types of Unemployment

There are three main types of unemployment: structural, frictional and cyclical. The first two make up the natural unemployment rate, while the third rises when demand falls, usually during a recession. Some economists include as many as five types of unemployment, such as seasonal and classical. See how this worked in U.S. history in Unemployment by Year.

Here's the different types of unemployment with links to more detailed articles so you can be

sure to tell them apart. Also, find out how unemployment is measured, and why some experts say it doesn't capture the real unemployment rate.

Frictional Unemployment

The easiest type of unemployment to explain is known as frictional unemployment. Frictional unemployment is unemployment that occurs because it takes workers some time to move from one job to another. While it may be the case that some workers find new jobs before they leave their old ones, a lot of workers leave or lose their jobs before they have other work lined up. In these cases, a worker must look around for a job that it is a good fit for her, and this process takes some time. During

this time, the individual is considered to be unemployed, but unemployment due to frictional unemployment is usually thought to last only short periods of time and not be specifically problematic from an economic standpoint. This is particularly true now that technology is helping both workers and companies make the job search process more efficient.

Frictional unemployment can also occur when students move into the work force for the first time, when an individual moves to a new city and needs to find work, and when women re-enter the work force after having children. (Note in the last case, however, that maternity leave doesn't count as unemployment!)

Cyclical Unemployment

It's probably not surprising that unemployment is higher during recessions and depressions and lower during periods of high economic growth. Because of this, economists have coined the term cyclical unemployment to describe the unemployment associated with business cycles occurring in the economy. Cyclical unemployment occurs during recessions because, when demand for goods and services in an economy falls, some companies respond by cutting production and laying off workers rather than by reducing wages and prices. (Wages and prices of this sort are referred to as "sticky.") When this happens, there are more workers in an economy than there are available jobs, and unemployment must result.