There are several types of unemployment found in many factors which contribute high or low unemployment in Taiwan. The first factor is structural unemployment. This factor made labor substitution exists and this reflects mismatch between the skills and the requirements of the new job opportunities. People lack the necessary skills for available jobs will make the high unemployment. Many people found it difficult to gain re-employment without an investment in re- training after unemployment. People’s tastes have changed or technology moved on often and the demand for product or service is no longer also leads to increase in unemployment rate.
The second factor that cause unemployment is fictional unemployment. It is transitional unemployment due to people moving between jobs. For example, university graduates may take time to find and settle into new jobs. If there are imperfect information in the labor market and the people are unaware of the available employment opportunities will make frictional unemployment worse . Third type of unemployment make the unemployment occur is cyclical unemployment. It occur when there is not enough demand to employ all those who want to work.
Besides, it also is involuntary unemployment due to a lack of aggregate demand for goods and services. For example, if the economy is booming, people will have a lot of demand, firms will employ many workers more than before to product goods. Therefore the cyclical unemployment will at this stage of the cycle be fairly low. The behavior of cyclical unemployment will exactly mirror the trade cycle. There is a disequilibrium in the economy because it depends on the results from short-term cyclical fluctuations in the economy.