Structural unemployment is caused by a mismatch between job vacancies and applicants’ skills or location. It cannot be solved by one-time stimulus measures, but training programs and tax breaks for companies could help. However, it is unlikely to be completely eliminated due to changing market conditions.
Structural unemployment, one of the main types of unemployment, is the mismatch between vacancies and job applicants in an economy. For example, local job seekers may be generally qualified but lack the specific skills needed for the job openings. This type of unemployment can also result if sufficiently skilled workers are looking for a job, but the available jobs are in another part of the country or the world. Any disparity between the skills of available workers and the requirements for open positions can be considered structural unemployment.
The dynamics of the labor market tend to give rise to this type of unemployment. Changing market conditions, like changing technology, continually alter the demand for labor. Training can become an important issue as workers try to predict the future job market. Specialized skills training requires a significant amount of time and resources. The resulting lag between the actual demand for labor and the current skill set of available workers is one of the main causes of structural unemployment.
Another cause of structural unemployment is the geographic mismatch between jobs and workers. In a large-scale economy like the United States, moving to a different part of the country for work often presents a major hurdle for workers. The financial costs involved in the change are often decisive. Other barriers to change include family ties and regional lifestyle preferences.
Seasonal unemployment can also cause this type of unemployment. Jobs that exist for only part of the year leave workers unemployed at the end of the season. In colder climates, construction work can only take place during the summer. Likewise, many agricultural jobs only exist for a fraction of the year. If workers are unable to find other jobs for the remaining months of the year, structural unemployment can result.
Remedies for structural unemployment vary from other types of unemployment. This problem usually cannot be eliminated by one-time stimulus measures, because this type of unemployment does not involve job shortages. Some have suggested that government programs to train workers might improve the problem. In addition, tax breaks can be provided to companies that locate jobs in areas with surplus labor. Despite these responsive measures, it is doubtful that this type of unemployment can be completely eliminated. As long as there are uncertainties in the economy, such as technological innovation and changing public taste, structural unemployment is likely to exist to some extent.
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