Definition of Structural Unemployment

What is “structural unemployment”? What is the definition of the term “structural unemployment”?

“Structural unemployment”, according to Wikipedia.org, results “from a mismatch between the sufficiently skilled workers seeking employment and demand in the labour market.”

What does this mean exactly?

Well, let’s say that there are currently 1 million job openings and 1 million unemployed workers. There is a job opening for each and every worker, so there should be no unemployment, right?

Well, what if these unemployed workers don’t have the skills necessary to fill these job openings? What if the job openings require people who are skilled in operating heavy machinery or using computers, and these unemployed workers don’t have these skills? The jobs will remain open and the workers will remain unemployed, and “structural unemployment” will occur.

Other Hypothetical Examples of Structural Unemployment:

1. Texas has a great need for oil industry workers, but workers from other states either don’t have the necessary skills or don’t want to uproot their families and move.

2. Many construction workers who moved to Las Vegas are now unemployed due to recession. However, other parts of the country are doing well and are in desperate need of construction workers. These workers that moved to Las Vegas are hesitant to move again, so they don’t take the available jobs in other states.

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