Question

How does structural unemployment differ from frictional unemployment?

Short answer

Frictional unemployment is temporary and due to the time it takes to find a new job. Structural unemployment is longer-term and caused by a mismatch in the skills of the unemployed and the skills required for existing jobs.

Step-by-step solution

Define Frictional Unemployment

Frictional unemployment is temporary in nature and intrinsic to the work force. It refers to the period of time between jobs when a worker is searching for, or transitioning from one job to another. It's also seen when workers are voluntarily transitioning between jobs, often as a result of disparate conditions, wages, hours, or physical locations.

Define Structural Unemployment

Structural Unemployment is a longer-lasting form of unemployment caused by fundamental shifts in an economy. It occurs when a labor market is unable to provide jobs for everyone who wants one because there is a mismatch between the skills of the workers and the skills needed for the available jobs.

Identify Differences

Both frictional and structural unemployment occur when a worker is between jobs. The main difference lies in the reasons for which they are jobless. Frictional unemployment is voluntary and short-term, while structural unemployment is involuntary and requires workers to learn new skills to do available jobs, causing it to be a longer-term problem.