What is Structural Unemployment?

Structural unemployment refers to a type of unemployment resulting from technological change, structural rearrangement of organizations, competition by firms, and government policy. Structural unemployment is not caused by mere inflations or economic fluctuations, although, changes in the economy is also a contributing factor. Structural unemployment does not imply that there are no jobs in an economy. When the skills of the workers in an economy do not match the jobs available, this type of unemployment can occur. Lack of proximity between the location of skilled workers and regions where jobs are available is another cause. A mismatch between the job needs of a firm and the skills of the workers is another factor.

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How does Structural Unemployment Happen? 

When structural unemployment affects a country, there are people willing to work but they lack the skills for the available jobs. Many reasons can cause a mismatch between the skills of workers and job requirements, for instance, a change in technology is a leading cause. In this case, workers become obsolete and unable to fit into the demand of technological innovations. Structural unemployment lasts longer than other forms of unemployment, it can last for decades if strategic measures are not taken to address the problem. The natural level in unemployment becomes prolonged with the presence of structural unemployment.

Examples of Structural Unemployment

During the 2008 great recession, there was a plague of cynical unemployment. Some countries as a result of the global recession also experienced structural unemployment, this include the United States and France. In the United States for example, the skills of workers became obsolete to the needs of the industries where jobs were available, this caused an increase in structural unemployment. There was a great mismatch of skills of workers and the jobs available. In France, a stringent of job flexibility and lack of mobility by workers with the required skills for the available jobs caused structural unemployment. There was a high rate of strike movement due to non-promotion of workers to long-term contracts which also contributed to structural unemployment in France.

Related Topics

• What is the US Labor Force?
• Out of the Labor Force
• Labor Force Participation Rate
• Establishment Payroll Survey
• Bureau of Labor Statistics 
• Unemployment 
• Underemployed
• Full Employment Equilibrium
• Okun's Law
•  Issues with Measuring Unemployment

• Sticky Wage Theory (Economics)
• Implicit Contract Theory of Wages
•  Efficient Wage Theory
• Adverse Selection of Wage Cuts Argument
• The Insider-Outsider Model
• Relative Wage Coordination Argument
• Natural Rate of Unemployment
• Frictional Unemployment
• Structural Unemployment
• Labor Productivity - Explained
• Okun's Law
• How does U.S. unemployment insurance work?
• National Average Wage Index
• Job Openings and Labor Turnover Survey
• Labor Surplus Area - Explained
• Lump of Labor Fallacy - Explained
• Bureau of Labor Statistics 
• ADP National Employment Survey
• Labor Theory of Value - Explained
• Wage Elasticity of Labor Supply