What is Structural Unemployment?

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Structural unemployment is a longer-lasting form of unemployment caused by fundamental shifts in an economy and exacerbated by extraneous factors such as technology, competition, and government policy. Structural unemployment occurs because workers lack the requisite job skills or live too far from regions where jobs are available and cannot move closer. Jobs are available, but there is a serious mismatch between what companies need and what workers can offer.

Definition

Structural unemployment is a long-term form of unemployment caused by fundamental changes in the economy, exacerbated by external factors such as technology, competition, and government policies. It occurs when workers lack the necessary skills or live too far from where jobs are available and cannot relocate. Although jobs are available, there is a significant mismatch between what companies need and what workers can offer.

Origin

The concept of structural unemployment originated in the mid-20th century when economists began to notice the profound impact of economic changes on the job market. With the acceleration of technological advancements and globalization, many traditional industry jobs disappeared while demand in emerging sectors increased, making this form of unemployment more pronounced.

Categories and Features

Structural unemployment can be categorized into technological unemployment and geographical unemployment. Technological unemployment arises when technological advancements render certain skills obsolete, while geographical unemployment occurs due to the uneven distribution of job opportunities and labor. Its features include long unemployment durations, difficulty in re-employment, and sensitivity to economic policies.

Case Studies

A typical case is the coal mining industry in the United States. With the strengthening of environmental policies and the rise of renewable energy, coal miners face unemployment as their skills no longer meet market demands. Another example is the automation in manufacturing, where many factory workers lost jobs due to the application of robots and automation technologies.

Common Issues

Investors might confuse structural unemployment with cyclical unemployment, which is caused by economic cycle fluctuations. Addressing structural unemployment requires long-term education and training policies rather than simple economic stimulus measures.

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Law Of Supply

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