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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

What is frictional unemployment? Give examples of frictional unemployment.

Assess whether the following would be counted as “unemployed” in the Current Employment Statistics survey.

a. A husband willingly stays home with children while his wife works.

b. A manufacturing worker whose factory just closed down.

c. A college student doing an unpaid summer internship.

d. A retiree.

e. Someone who has been out of work for two years but keeps looking for a job.

f. Someone who has been out of work for two months but isn’t looking for a job.

g. Someone who hates her present job and is actively looking for another one.

h. Someone who decides to take a part time job because she could not find a full time position.

What forces create the natural rate of

unemployment for an economy?

Are U.S. unemployment rates distributed evenly across the population?

Under what condition would an increase in the unemployment rate be a positive sign?
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