Chapter 16: Problem 9

Structural unemployment is caused by a. shifts in the economy that make certain job skills obsolete. b. temporary layoffs in industries such as construction. c. the impact of the business cycle on job opportunities. d. short-term changes in the economy.

Short Answer

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Option A: Structural unemployment is caused by shifts in the economy that make certain job skills obsolete, leading to a mismatch between the skills workers possess and the skills demanded by employers.

Step by step solution

Define Structural Unemployment

Structural unemployment is a form of unemployment that is caused by a mismatch between the skills that workers possess and the skills demanded by employers. This mismatch can occur when there is a shift in the economy, technological advancements, or changes in demand for certain products or services. It is a long-term type of unemployment and can be difficult to address through standard policy measures. Now, let's examine each option and determine which one is the cause of structural unemployment.

Option A: Shifts in the economy

This option focuses on changes in the economy that make specific job skills obsolete, such as the decline of manufacturing jobs or the rise of information technology jobs. These shifts contribute to a mismatch between the skills workers possess and the skills demanded by employers, resulting in structural unemployment. This option best matches the definition of structural unemployment.

Option B: Temporary layoffs

Temporary layoffs, such as those experienced in industries like construction, are typically considered cyclical unemployment, not structural. Cyclical unemployment occurs when there is a downturn in the economy, and employers temporarily cut back on hiring or lay off workers. Once the economy improves, the laid-off workers are usually rehired. This type of unemployment is not caused by a mismatch of skills, so it is not the correct answer.

Option C: Impact of the business cycle

The impact of the business cycle on job opportunities is closely related to cyclical unemployment, as mentioned in option B. When the economy is in a recession, there are fewer job opportunities in general, but it doesn't necessarily mean there is a structural mismatch between workers' skills and employers' demands. This option, like option B, does not describe the cause of structural unemployment.

Option D: Short-term changes in the economy

Short-term changes in the economy, such as temporary fluctuations in demand or supply, usually lead to frictional unemployment. Frictional unemployment occurs when workers are in between jobs or are just entering the labor force. It's a normal part of a healthy, functioning economy and not considered a major cause of structural unemployment.

Identifying the Correct Answer

Based on the definitions and explanations provided above, it is clear that option A - shifts in the economy that make certain job skills obsolete - is the correct answer. This option best aligns with the cause of structural unemployment, which is a mismatch between the skills of workers and the needs of employers due to changes in the economy.

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