Final answer:
Unemployment insurance schemes increase frictional unemployment, which is temporary joblessness during job transitions. Cyclical unemployment arises from economic downturns, and structural unemployment results from industry changes or technological evolutions that displace workers.
Step-by-step explanation:
Unemployment insurance schemes mainly increase frictional unemployment. This occurs when workers are temporarily unemployed while transitioning between jobs, often taking time to find the right job match for their skills. Here's what type of unemployment applies to each situation:
- Landscapers laid off due to a recession are experiencing cyclical unemployment, which relates to the downturn in the business cycle.
- Coal miners laid off because of environmental regulations face structural unemployment, as the industry changes and their jobs no longer exist.
- A financial analyst moving from Chicago to Arizona is an example of frictional unemployment, as they are in transition between jobs by choice.
- Printers laid off as companies move to digital advertising are also faced with structural unemployment due to technological advances.
- Factory workers laid off as production moves overseas experience structural unemployment, owing to the global relocation of their jobs.
Cyclical unemployment is zero when the economy is at potential GDP, but there will always be some natural unemployment, including frictional and structural types, even when the economy is strong.