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. The
unemployed workers may lack the skills needed for the jobs, or they may not live in the
part of the country or world where the jobs are available. Structural unemployment is
one of the five major categories of unemployment distinguished by economists. Structural unemployment
is generally considered to be one of the "permanent" types of unemployment, where improvement if
possible, will only occur in the long run.
Types Obsolescence of a single technology will make
specific expertise useless. For instance, jobs for manual typesetters disappeared with
digitalization of printing plate production. Increase of the efficiency in an economic
sector reduces the number of required workers. For instance, fewer agricultural workers are
needed when the work is mechanized. Closely related is the increased demand for skill,
training and formal education, as the new machinery often requires fewer, but higher-skilled
workers. Due to this, unskilled laborers are the first to go unemployed, and the most likely
to stay so. Political changes and globalization also cause
structural unemployment. Termination of government subsidies, for instance, can lead to termination
of production and unemployment. On the contrary, in countries joining the European Union, there
was a loss of jobs in freight forwarding, because a customs border disappeared and so
did the demand for handling customs declarations and documentation.
Reduced relative competitiveness of an industry in a country can also lead to structural unemployment.
Basic manufacturing in the West has been hit by this. Lower wages in less developed countries
have attracted manufacturing away from the West.
Market inefficiencies can also cause structural unemployment. In an efficient market the jobseeker
and an employer wishing to recruit can connect, whereas in an inefficient market this is impeded,
for instance due to discrimination. Effects
Bankruptcies of large companies are often devastating for the economy of towns where
a single site accounts for much of the local income. The local economy does not necessarily
generate jobs fast enough to employ the laid-off workers, forcing them to either move or go
unemployed. Many of the displaced workers are "left behind" due to costs of training
and moving and inability to find new jobs. Relation to other unemployment
Structural unemployment is hard to separate empirically from frictional unemployment,
except to say that it lasts longer. As with frictional unemployment, simple demand-side
stimulus will not work to easily abolish this type of unemployment.
Seasonal unemployment may be seen as a kind of structural unemployment, since it is a
type of unemployment that is linked to certain kinds of jobs. The most-cited official unemployment
measures erase this kind of unemployment from the statistics using "seasonal adjustment"
techniques. Structural unemployment may also be encouraged
to rise by persistent cyclical unemployment: if an economy suffers from long-lasting low
aggregate demand, it means that many of the unemployed become disheartened, while their
skills become "rusty" and obsolete. Problems with debt may lead to homelessness and a fall
into the vicious circle of poverty. This means that they may not fit the job vacancies that
are created when the economy recovers. The implication is that sustained high demand
may lower structural unemployment. This theory of persistence in structural unemployment
has been referred to as an example of path dependence or "hysteresis."
Possible causes Structural unemployment is caused by a mismatch
between jobs offered by employers and potential workers. This may pertain to geographical
location, skills, and many other factors. For example, in the late 1990s there was a
tech bubble, creating demand for computer specialists. In 2000-2001 this bubble collapsed.
A housing bubble soon formed, creating demand for real estate workers, and many computer
workers had to retrain to find employment. The causes of structural unemployment can
happen because of automation in the work place, rigidities in the labor market, such as high
costs of training or in the case of US de-industrialization as manufacturing jobs are continuously lost
to off-shoring. Some economists posit that the minimum wage
is in part to blame for structural unemployment, although structural unemployment does exist
even in the absence of a minimum wage. They assert that because the federally imposed
minimum wage is higher than some individuals' marginal revenue product in any given job,
that those individuals remain unemployed because employers legally cannot pay them what they
are "worth." Others believe that in such cases it is the responsibility of the state to provide
for the citizen in question. When a minimum wage does not exist, more people may be employed,
but they may be underemployed and thus unable to fully provide for themselves.
See also 99ers, the significant American group resulting
from the Great Recession Deindustrialization
Differences between the Natural Rate of Unemployment and the NAIRU
Jobless recovery Post-industrial society
Types of unemployment Technological unemployment
References
Bibliography Ford, Martin R., The Lights in the Tunnel:
Automation, Accelerating Technology and the Economy of the Future, Acculant Publishing,
ISBN 978-1448659814. Rifkin, Jeremy, The End of Work: The Decline
of the Global Labor Force and the Dawn of the Post-Market Era, New York: Tarcher–G.P.
Putnam's Sons, ISBN 978-0-87477-779-6. Further reading
Ganapati, Priya. Brainy Robots To Lead To Longer Unemployment Lines? October 25, 2008.