What characterizes structural unemployment?

Structural unemployment is characterized by a mismatch between the skills that workers possess and the skills needed by employers, often resulting from industrial reorganization, technological advancements, or shifts in the economy. This type of unemployment typically arises when there are significant changes in the labor market, such as the decline of certain industries or the emergence of new technologies that render certain jobs obsolete.

For example, when a factory automates its assembly line, workers who previously held manual positions may find themselves without jobs because the skills they possess no longer match the requirements of the new automated environment. This unemployment can be more persistent than other types because it often requires workers to retrain or relocate to find employment in new industries that require different skills.

In contrast, unemployment that occurs during a recession is usually cyclical, as it is related to the economic cycle, where demand for goods and services falls, leading to job losses. Unemployment due to individual choices reflects voluntary decisions made by workers, such as choosing to leave a job for personal reasons, which does not align with the structural definition. Finally, temporary unemployment affects only a small percentage of the labor force and is often tied to seasonal work or short-term projects, rather than the long-term changes that are characteristic of structural unemployment.