Explain why both cyclical and structural unemployment occur during a recession

Cyclical and structural unemployment both occur during a recession due to different reasons:

1. Cyclical Unemployment: This type of unemployment is directly related to the business cycle, hence the name 'cyclical'. During a recession, the economy contracts, meaning there is a decrease in demand for goods and services. As a result, businesses may need to cut costs, which often leads to layoffs. Therefore, the number of unemployed individuals increases during a recession, leading to higher cyclical unemployment.

2. Structural Unemployment: This type of unemployment occurs when there is a mismatch between the skills that workers in the economy can offer and the skills needed by employers. During a recession, many businesses may close or restructure, leading to certain jobs becoming obsolete. At the same time, new industries may emerge, requiring skills that unemployed individuals do not possess. This mismatch leads to structural unemployment.

In summary, cyclical unemployment rises because of the overall downturn in the economy, while structural unemployment increases due to changes in the economy that make certain skills and jobs obsolete. Both types of unemployment can occur simultaneously during a recession.