Structural Unemployment: Definition, Causes & Examples

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  • 0:01 Definition of…
  • 0:25 Examples of Structural…
  • 1:38 Causes of Structural…
  • 2:25 Combating Structural…
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Lesson Transcript
Instructor: Shawn Grimsley

Shawn has a masters of public administration, JD, and a BA in political science.

Structural unemployment can present a very serious problem to an economy. In this lesson, you'll learn what structural employment is and what causes it, and you'll be provided some examples. You'll also have a chance to take a short quiz.

Definition of Structural Unemployment

Structural unemployment exists when there are jobs available and people willing to do work, but there are not a sufficient number of people qualified to fill the vacant jobs. In other words, employers can neither find enough workers nor can workers find jobs for which they are qualified. Structural unemployment often occurs when the demand for specific types of labor changes as the economy changes.

Examples of Structural Unemployment

Let's look at some examples to illustrate the idea of structural unemployment.

The manufacturing industry, for example, has been in significant decline in the United States over the last few decades. The rise of the service economy, and then the information economy, has been filling the vacuum. However, the skills needed in manufacturing are not very similar to the skills needed in a service or information economy, which require a significant amount of education and technological knowledge and skills. Consequently, we see a lot of people losing jobs as manufacturing leaves the United States, and these people don't have the skills to qualify for the jobs that are replacing the manufacturing jobs. This is an example of structural unemployment.

Once upon a time, people used hand looms to make textiles. Many artisans, called weavers, were engaged in making cloth through the use of these hand looms. The Industrial Revolution came along, and machines were created that could weave the cloth without the use of a skilled weaver. All of a sudden, weavers were out of work, and their skills didn't match the needs of the marketplace. We see this even today as automation keeps on reducing the need for skilled labor.

Causes of Structural Unemployment

Looking at the two examples above, we can discern two major causes of structural unemployment.

One cause is industrial decline. An overall decline of an industry in an economy can lead to structural unemployment like the manufacturing example we described. Workers who lose jobs when an industry is in decline often do not have the skills to perform the jobs in emerging industries that replace the declining industries.

The second cause is obsolescence. More specifically, sometimes structural unemployment can occur when new technology makes a type of skilled labor obsolete. When technology replaces these skilled workers, the workers often don't have the skills required for different positions, which leads to structural unemployment.

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