Distinguish between structural and frictional unemployment. Consider which would be likely to have the greater negative effect on an economy.

Mark scheme

Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.

1. Structural unemployment arises from changes in the pattern of demand in an economy and is usually focused upon specific industries or geographical areas. It can also be caused by the introduction of new technology acting as a substitute for labour. Frictional (or search) unemployment arises due to imperfect information in the labour market. Workers are unemployed primarily due to the time taken to find a new job. Both types have a negative impact on an economy but it is generally assumed that structural unemployment will have a long-term impact and impose higher costs on society compared with frictional unemployment which normally lasts a relatively short time. Hence, it may be concluded that structural unemployment is likely to cause the greater negative impact.
2. L4 (9-12): for a clear explanation of both types of unemployment and their main differences. A conclusion as to which type has the greater negative effect, supported by an appropriate rationale
3. L3 (7-8): for a clear explanation of the differences between both types of unemployment and a conclusion which is stated rather than supported by an appropriate rationale
4. L2 (5-6): for a clear distinction between both types of unemployment but no comment on the effect on the economy
5. L1 (1-4): for an answer that shows some knowledge but does not indicate that the question has been fully grasped or where the answer is mostly irrelevant
6. Supply side polices are government policies that attempt to alter the level of aggregate supply directly rather than through changes in aggregate demand. They can be market oriented or through direct government intervention. Interventionist policies might include: education and training. Market policies might include taxation; reduction in unemployment benefits – these policies would aim to increase labour geographical/occupation mobility and enable specific focus on unemployment caused by changes in the pattern of demand. Alternative policies such as Keynesian demand management policies would not be suitable because they would lack focus and may cause problems in those areas which are not experiencing high unemployment. However, supply-side policies often take a long time and they are frequently costly.
7. L4 (9-13): for a discussion of the extent of the effectiveness of supply-side polices with some attempt to compare alternative demand management policies and some attempt to identify potential problems such as, the long time period needed for success or the high cost of intervention. There should be a conclusion.
8. L3 (7-8): for an analysis of how different supply-side policies would work and some attempt to explain why they would be the most appropriate strategy to solve structural unemployment. Max 7 if no conclusion
9. L2 (5-6): for an answer that identifies a range of alternative supply-side policies but does not explain how these policies would work to solve the particular problem of structural unemployment, and no comparison or conclusion
10. L1 (1-4): for an answer that shows some knowledge but does not indicate that the question has been fully grasped or where the answer is mostly irrelevant.