structural unemployment
(noun)
A mismatch between the requirements of the employers and the properties of the unemployed.
Examples of structural unemployment in the following topics:
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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.
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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.
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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.
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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.
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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.
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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.
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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:
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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.
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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.
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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.