What you should know about cyclical unemployment
Religion & Liberty Online

What you should know about cyclical unemployment

Note: This is post #102 in a weekly video series on basic economics.

Cyclical unemployment is a type of unemployment that is connected to the regular ups and downs—the cyclical trends in growth and recession—that occur within the business cycle. One factor that affects cyclical unemployment is “sticky wages.” As Alex Tabarrok of Marginal Revolution University explains, wages often adjust more slowly after an economic contraction, which in turn reduces an employer’s incentive to hire. Other factors affecting wage adjustment could include minimum wages or union contracts, which put contractual limits on how low wages can go. All of these factors affect the rate at which unemployed workers are rehired.

(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Click here to see other videos in the Introduction to Economics series.

Joe Carter

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).