Structural unemployment

Signifies mismatch between the supply of and the demand for workers. Mismatches can occur because the demand for one kind of labor is rising while the demand for another kind is falling, and supplies do not quickly adjust. We often see structural imbalances across occupations or regions as certain sectors grow while others decline. For example, an acute shortage of nurses arose in the mid- 1980s as the number of nurses grew slowly while the . demand for nursing care grew rapidly because of an aging population and other forces. Not until nurses’ salaries rose rapidly and the supply adjusted did the structural shortage of nurses decline. By contrast, the demand for coal miners has been depressed for decades because of the lack of geographic mobility of labor and capital; unemployment rates in coal-mining communities remain high today. In European countries, high real wages,welfare benefits, and taxes have created high levels of structural unemployment for entire economies over the last decade.

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