Structural unemployment Unemployment

okun s law interprets unemployment function of rate of growth in gdp.

structural unemployment occurs when labour market unable provide jobs wants 1 because there mismatch between skills of unemployed workers , skills needed available jobs. structural unemployment hard separate empirically frictional unemployment, except lasts longer. frictional unemployment, simple demand-side stimulus not work abolish type of unemployment.

structural unemployment may encouraged rise persistent cyclical unemployment: if economy suffers long-lasting low aggregate demand, means many of unemployed become disheartened, while skills (including job-searching skills) become rusty , obsolete. problems debt may lead homelessness , fall vicious circle of poverty.

this means may not fit job vacancies created when economy recovers. implication sustained high demand may lower structural unemployment. theory of persistence in structural unemployment has been referred example of path dependence or hysteresis .

much technological unemployment, due replacement of workers machines, might counted structural unemployment. alternatively, technological unemployment might refer way in steady increases in labour productivity mean fewer workers needed produce same level of output every year. fact aggregate demand can raised deal problem suggests problem instead 1 of cyclical unemployment. indicated okun s law, demand side must grow sufficiently absorb not growing labour force workers made redundant increased labour productivity.

seasonal unemployment may seen kind of structural unemployment, since type of unemployment linked kinds of jobs (construction work, migratory farm work). most-cited official unemployment measures erase kind of unemployment statistics using seasonal adjustment techniques. results in substantial, permanent structural unemployment.