Which type of unemployment occurs due to economic downturns?

Cyclical unemployment is directly linked to the fluctuations in the economic cycle, specifically during periods of economic downturns or recessions. During these times, companies experience reduced demand for goods and services and may respond by laying off workers or freezing hiring. This form of unemployment is a result of the overall health of the economy; when economic conditions improve, cyclical unemployment typically decreases as businesses start hiring again to meet increased consumer demand.

Other types of unemployment, such as frictional unemployment, occurs when individuals are temporarily unemployed while transitioning between jobs or entering the workforce. Structural unemployment arises from changes in the economy that create a mismatch between workers' skills and the available jobs, often due to technological advancements or shifts in industries. Seasonal unemployment is related to changes in demand for labor at certain times of the year, such as agricultural or retail work during specific seasons. None of these types are directly tied to the broader economic cycles like cyclical unemployment is.