Structural unemployment

Structural unemployment is a form of unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers (also known as the skills gap). Structural unemployment is often brought about by technological changes that make the job skills of many of today's workers obsolete.

Structural unemployment is one of several major categories of unemployment distinguished by economists, including frictional unemployment, cyclical unemployment, involuntary unemployment, and classical unemployment.

Because it requires either migration or re-training, structural unemployment can be long-term and slow to fix.

From an individual perspective, structural unemployment can be due to:

From a larger perspective, there can be a number of reasons for structural unemployment across large numbers of workers:

Large-scale changes in the economy can be particularly challenging. For example, if a large company is the only employer in a given industry for a certain city, when it closes workers will have no competing company to move to, and the local education system and government will be burdened with many people who need job re-training all at once (possibly at the same time the local economy fails to create new jobs due to decreased overall demand).

Employers may also reject workers for reasons unrelated to skills or geography, so for example structural unemployment can also result from discrimination.

While temporary changes in overall demand for labor cause cyclical unemployment, structural unemployment can be caused by temporary changes in demand from different industries. For example, seasonal unemployment often affects farm workers after harvesting is complete, and workers in resort towns after the tourist season ends. The dot-com bubble caused a temporary spike in demand for information technology workers, which was suddenly reversed in 2000-2001.

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