structural unemployment

(noun)

A mismatch between the requirements of the employers and the properties of the unemployed.

Related Terms

Examples of structural unemployment in the following topics:

  • Types of Unemployment: Frictional, Structural, Cyclical

    • Structural unemployment is one of the main types of unemployment within an economic system.
    • Structural unemployment occurs when a labor market is not able to provide jobs for everyone who is seeking employment.
    • The natural unemployment rate, sometimes called the structural unemployment rate, was developed by Friedman and Phelps in the 1960s.
    • The natural rate of unemployment is a combination of structural and frictional unemployment.
    • When there is structural unemployment, workers may seek to learn different skills so that they can apply to new types of jobs.

  • Reasons for Unemployment

    • There are three reasons for unemployment which are categorizes as frictional, structural, and cyclical unemployment.
    • The reason why the natural rate of unemployment is still positive is due to frictional and structural unemployment.
    • There is always at least some frictional unemployment in an economy, so the level of involuntary unemployment is properly the unemployment rate minus the rate of frictional unemployment.
    • Structural unemployment is a form of unemployment where, at a given wage, the quantity of labor supplied exceeds the quantity of labor demanded, because there is a fundamental mismatch between the number of people who want to work and the number of jobs that are available.
    • A common cause of structural unemployment is technological change.

  • Impact of Public Policy on Unemployment

    • Most governments strive to achieve low levels of unemployment.
    • Governments can enact policies to try to reduce frictional unemployment.
    • Structural unemployment is due to more people wanting jobs than there are jobs available.
    • Public policy can respond to structural unemployment through programs like job training and education to equip workers with the skills firms demand.
    • Many organizations seek to minimize structural unemployment by offering job training and education to provide workers with in-demand skills.

  • Typical Lengths of Unemployment

    • Long-term unemployment lasts 27 or more weeks.
    • Structural: occurs when the labor market is not able to provide jobs for everyone who wants to work.
    • There is a mismatch between the skills of the workers and the skills needed for the jobs that are available.Structural unemployment is similar to frictional unemployment, but it lasts longer.
    • Short-term unemployment is considered any unemployment period that lasts less than 27 weeks.
    • Long-term unemployment is classified as unemployment that lasts for 27 weeks or longer.

  • Macroeconomics

    • Macroeconomics is the study of the performance, structure, behavior and decision-making of an economy as a whole.
    • Macroeconomics is the study of the performance, structure, behavior and decision-making of an economy as a whole .
    • Most economists believe that there will always be a certain amount of frictional, seasonal and structural unemployment (referred to as the natural rate of unemployment).
    • As a result, full employment does not mean zero unemployment.
    • These models rely on aggregated economic indicators such as GDP, unemployment, and price indices.

  • Measuring the Unemployment Rate

    • Structural unemployment: occurs when the labor market is unable to provide jobs for everyone who wants to work.
    • The unemployment rate is measured using two different labor force surveys.
    • The survey measures the unemployment rate based on the ILO definition.
    • The unemployment rate is updated on a monthly basis.
    • They calculate different aspects of unemployment.

  • Defining Unemployment

    • Structural: occurs when the labor market is not able to provide jobs for everyone who wants to work.
    • It differs from frictional unemployment because it lasts longer.
    • Hidden: the unemployment of potential workers that is not taken into account in official unemployment statistics because of how the data is collected.
    • The final measurement is called the rate of unemployment .
    • The effects of unemployment can be broken down into three types:

  • Defining Full Employment

    • Full employment is defined as an acceptable level of unemployment somewhere above 0%; there is no cyclical or deficient-demand unemployment.
    • Ideal unemployment excludes types of unemployment where labor-market inefficiency is reflected.
    • Ideal unemployment promotes the efficiency of the economy.
    • The full employment unemployment rate is also referred to as "natural" unemployment.
    • Full employment is defined as "ideal" unemployment.

  • Shortcomings of the Measurement

    • Unemployment is measured in order to determine the unemployment rate.
    • In order to find the rate of unemployment, four methods are used:
    • Calculates unemployment by different categories such as race and gender.
    • This method is the least effective for measuring unemployment.
    • The unemployment rate is the percentage of unemployment calculated by dividing the number of unemployed individuals by the number of individuals currently employed in the labor force.

  • The Short-Run Phillips Curve

    • The Phillips curve depicts the relationship between inflation and unemployment rates.
    • As unemployment rates increase, inflation decreases; as unemployment rates decrease, inflation increases.
    • When the unemployment rate is 2%, the corresponding inflation rate is 10%.
    • As unemployment decreases to 1%, the inflation rate increases to 15%.
    • As output increases, unemployment decreases.