IELTS Reading Classification questions: exercise 1

In this exercise you will train your IELTS Reading skills and develop answering techniques for classification questions in IELTS Reading. Just to remind you, in classification questions you're given some options (A, B, C etc.) and a list of statements. Your task is to read the text, and connect each statement to one option.

If you want to learn more about classification questions, you can check out this lesson.

Let's begin. Read the text and answer the questions below. Don't worry, we'll provide you with the correct answers and detailed explanations.

Fluctuation of unemployment rate

During the recent downturn, the unemployment rate in America jumped from 4.4% to 10%. Economic growth has since pepped up. But unemployment is nowhere near pre-crisis lows: America’s rate, at 6.2%, is still 40% higher than late 2006. Economists are raising the spectre of “structural” unemployment to explain this puzzle. What is it?

Economists often refer to three types of unemployment: "frictional", “cyclical” and “structural”. Cold-hearted economists are not too worried about the first two, which refer to people moving between jobs and those temporarily laid-off during a downturn.

Frictional unemployment exists because both jobs and workers are heterogeneous (in other words, they have different expectations). And a mismatch can result between the characteristics of supply and demand. Such a mismatch can be related to skills, payment, worktime, location, attitude, taste, and a multitude of other factors. New entrants (such as graduating students) and re-entrants (such as former homemakers) can also suffer a spell of frictional unemployment. Workers as well as employers accept a certain level of imperfection, risk or compromise, but usually not right away; they will invest some time and effort to find a match. This is in fact beneficial to the economy since it results in a better allocation of resources. However, if the search takes too long and mismatches are too frequent, the economy suffers, since some work will not get done. Therefore, governments seek ways to reduce unnecessary frictional unemployment, and hopefully it’s not hard to do so.

The second type, cyclical unemployment deals with an economy's business cycle. Cyclical unemployment occurs when there are job losses during downturns and contractions in the business cycle. A lack of demand is one of the main factors that cause cyclical unemployment. When there is a drop in consumer demand, business revenues usually decline. Consequently, companies have to lay off workers to cut their costs to maintain their profit margins.

For example, the U.S. economy faced cyclical unemployment during the 2008 financial crisis. As more and more subprime mortgage lenders filed for bankruptcy, homes were not being constructed. Consequently, many people who were employed as construction workers and home builders lost their jobs and experienced cyclical unemployment.

The third kind refers to people who are excluded, perhaps permanently, from the labour market. In econo-speak, structural unemployment refers to the mismatch between the number of people looking for jobs and the number of jobs available. It is bad news both for those who suffer from it and for the society in which they live. People out of work for long periods tend to have poorer health than average. The structurally unemployed also squeeze social-security budgets.

Structural unemployment in advanced economies has been rising for decades, as jobs in industries like mining and manufacturing have withered. In Britain between 1984 and 1992, employment in coal mining fell by 77% and in steelmaking by 72%. Communities that were built around a single profession were devastated. Many of the people affected only had experience of a specific, high-skill job. They did not have the skills or attributes needed to be successful in many service-sector jobs (such as working in a call centre or in a restaurant). Hence they were structurally unemployed. A different problem may be afflicting advanced economies today. The downturn was truly nasty and has lasted for years. Many people gave up looking for a job and withdrew from the labour force. In America the number of these “discouraged workers” jumped from 370,000 in 2007 to 1.2m in 2010. (Today it is twice its 2007 level.)  

Most economists would accept that a certain level of unemployment is inevitable: an attempt to achieve full employment would stoke massive wage inflation. Whatever its causes, governments have to understand structural unemployment. Economic growth alone will not be enough to get everyone into work. Supply-side reforms, such as job training (known by wonks as “active labour market policies”) are also needed.

Questions 1-8

Classify the following statements as referring to:

  1. frictional unemployment
  2. cyclical unemployment
  3. structural unemployment

Write the appropriate letters A, B or C in boxes 1-8:

  1. Mismatch between the number of people looking for jobs and the number of jobs available results in a long-term unemployment.

  2. In 2008 many Americans who were employed as construction workers lost their jobs.

  3. Downturns in the economy’s business cycle results in temporary job losses.

  4. It is not difficult to reduce this kind of unemployment.

  5. As jobs in industries like mining and manufacturing have withered, this type of unemployment has started to rise in advanced economies.

  6. Mismatch between the characteristics of supply and demand on job market results in this type of unemployment.

  7. During the economy’s most massive downfalls, many people give up looking for a job and withdraw from the labour force.

  8. To reduce this kind of unemployment, society needs supply-side reforms and job trainings.