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Chapter 8: Q 27 (page 214)

What is structural unemployment? Give examples of structural unemployment.

Short Answer

Expert verified

It is type of unemployment that occurs when individuals lack skills valued by employers.

Step by step solution

01

Step 1. Introduction 

Natural rate of unemployment is determined by long term trends of economy. It occurs when economy is in steady state of 'full employment' but proportion is still unemployed. 'Full employment' does not mean 'Zero unemployment'. It reflects to type of unemployment:

02

Step 2. Structural unemployment

Major factor of natural rate of employment is structural unemployment. It is type of employment where person is jobless and lacks skills which are required or in demand in labor market.

Advancement in technologies have created the demand for high-skilled workers and decreases the demand for low-skilled workers.

03

Step 3. Examples

For example US manufacturing sector has been declining over years because of growing service sector and improvement in technology so some people are unable to find job in service sector and are loosing job in manufacturing and technology sector in economy because they do not possess such skills and knowledge as demanded by those sectors.

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Most popular questions from this chapter

When would you expect cyclical unemployment to be rising? Falling?

A country with a population of eight million adults

has five million employed, 500,000 unemployed, and the rest of the adult population is out of the labor force. What’s the unemployment rate? What share of population is in the labor force? Sketch a pie chart that divides the adult population into these three groups.

Would you expect hidden unemployment to be higher, lower, or about the same when the unemployment rate is high, say 10%, versus low, say 4%? Explain.

What is frictional unemployment? Give examples of frictional unemployment.

As the baby boom generation retires, the ratio of retirees to workers will increase noticeably. How will this affect the Social Security program? How will this affect the standard of living of the average American?
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