Which type of unemployment includes individuals who are involuntarily jobless?

Cyclical unemployment refers to individuals who are involuntarily jobless due to economic downturns or recessions. This type of unemployment rises when there is not enough demand for goods and services in the economy, prompting businesses to reduce their workforce. During these periods, many people may find themselves out of work not because they lack skills or are unwilling to work, but because the overall economic conditions are unfavorable for job creation.

In contrast, frictional unemployment is temporary and occurs when individuals are transitioning from one job to another or entering the workforce for the first time. Discouraged workers are those who have stopped searching for jobs because they believe there are no available positions that suit their skills, and hidden unemployment typically includes those who are not counted in official unemployment statistics, often because they are underemployed or have given up seeking employment altogether.

Understanding cyclical unemployment is crucial as it provides insight into the broader economic climate and the relationship between unemployment and economic performance.