Business cycle and unemployment

In short: The economy does not grow evenly but in waves: upswing, boom, downswing, recession. Unemployment fluctuates with the business cycle.

In more detail: In a recession demand falls, firms hire less or lay off. In an upswing new jobs appear.

In detail

• Business cycle: Phases of rising and falling output (bruttoinlandsprodukt-bip).
• Unemployment rate: Share of the unemployed in the labour force.
• Types: Cyclical, seasonal (construction in winter), structural (an industry shrinks), frictional (job changes).
• Short-time work: Helps keep employment in crises.
• Policy: The state can support through spending; central banks steer through interest rates (zentralbank-und-leitzins).
• Consequences: Loss of income, but also retraining and change are possible.
• Protection: Unemployment insurance (sozialversicherung-die-fünf-säulen-in-deutschland).