Question

What is structural unemployment? Give examples of structural unemployment.

Short answer

It is type of unemployment that occurs when individuals lack skills valued by employers.

Step-by-step solution

Step 1. Introduction 

Natural rate of unemployment is determined by long term trends of economy. It occurs when economy is in steady state of 'full employment' but proportion is still unemployed. 'Full employment' does not mean 'Zero unemployment'. It reflects to type of unemployment:

Step 2. Structural unemployment

Major factor of natural rate of employment is structural unemployment. It is type of employment where person is jobless and lacks skills which are required or in demand in labor market.

Advancement in technologies have created the demand for high-skilled workers and decreases the demand for low-skilled workers.

Step 3. Examples

For example US manufacturing sector has been declining over years because of growing service sector and improvement in technology so some people are unable to find job in service sector and are loosing job in manufacturing and technology sector in economy because they do not possess such skills and knowledge as demanded by those sectors.