What is Structural Unemployment?

Structural unemployment, one of the main unemployment types, is the mismatch between job openings and job seekers in an economy. For example, local job seekers may be generally skilled, but lack the specific skills required for available job openings. This type of unemployment can also result if sufficiently skilled workers are seeking employment, but available jobs are in another part of the country or the world. Any disparity between the abilities 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 typeof unemployment. Shifting market conditions, such as changing technology, continuously alter the demand for labor. Training can become a major issue as workers try to predict the future job market. Training for specialized skills 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 major cause of structural unemployment.

Another cause of structural unemployment is the geographic mismatch between jobs and workers. In a large-scale economy such as that of the United States, moving to a different part of the country for work usually presents a major obstacle for workers. Financial costs involved with moving are often deal-breakers. Other barriers to moving include family ties and regional living preferences.

Seasonal unemployment can also cause this type of unemployment. Jobs that exist during only one part of the year leave workers jobless at the end of the season. In colder climates, construction work may only take place during the summer. Similarly, many farming jobs exist for only 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 can not generally be eliminated by one-time stimulus measures because this type of unemployment doesn't involve a shortage of jobs. Some have suggested that government programs to retrain workers can ameliorate the problem. Additionally, tax incentives could be provided to companies that locate jobs in areas with surplus labor. Despite these responsive measures, it is doubtful this type of unemployment can be completely eliminated. So long as uncertainties in the economy exist, such as technological innovation and evolving public taste, structural unemployment is likely to exist to some extent.