Final answer:
During the COVID-19 economic crisis, the government increasing the duration and amount of unemployment benefits can impact the duration of unemployment spells and the natural rate of unemployment. Frictional, structural, and cyclical unemployment can be identified in different scenarios, such as landscapers laid off during a recession or coal miners laid off due to regulations. The increase in unemployment benefits may reduce the duration of unemployment spells but could also increase the natural rate of unemployment.
Step-by-step explanation:
Types of Unemployment:
a. Cyclical unemployment: This applies to the landscapers laid off in response to a drop in new housing construction during a recession. Cyclical unemployment occurs due to fluctuations in the business cycle.
b. Structural unemployment: This applies to the coal miners laid off due to EPA regulations that shut down coal-fired power plants. Structural unemployment occurs when demand shifts permanently away from a certain type of job skill.
c. Frictional unemployment: This applies to the financial analyst who quits their job in Chicago and is pursuing similar work in Arizona. Frictional unemployment occurs when people choose to change jobs or are temporarily out of work due to shifting economic conditions.
Regarding the increase in unemployment benefits during the COVID-19 economic crisis, it would primarily impact the duration of unemployment spells and the natural rate of unemployment. It can potentially reduce the duration of unemployment spells as individuals receive support for a longer period of time. However, it may also increase the natural rate of unemployment, which is the sum of frictional and structural unemployment, as individuals may be less motivated to actively seek and accept employment opportunities.