Did you know there are several types of unemployment? In our previous post, we talked about frictional unemployment. There are two others, structural and cyclical. In this post, we’re discussing structural unemployment and why it happens.
Structural unemployment is a type of unemployment that occurs when there is a mismatch between the skills and qualifications of workers and the requirements of available jobs.
This type of unemployment arises from changes in the economy that result in a shift in demand for certain skills and jobs, such as advances in technology, changes in consumer preferences, or shifts in global trade patterns.
As a result, some workers may find that their skills are no longer in demand, and they may have difficulty finding new employment in their field.
Structural unemployment can also result from other factors, such as geographical mismatches between job opportunities and worker populations, or from rigidities in the labor market, such as restrictive labor laws, that make it difficult for workers to move to where the jobs are.
Structural unemployment is different from frictional unemployment, which is temporary and occurs when workers are between jobs, or from cyclical unemployment, which is related to the ups and downs of the business cycle.
Structural unemployment is considered a long-term and persistent problem, as it can take a long time for workers to acquire new skills and find new employment.
Addressing structural unemployment requires a combination of training and education programs, public policy changes, and private sector initiatives to promote job creation and match workers with available jobs.
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