Explain why structural unemployment might occur in an economy.

Structural unemployment is a form of involuntary unemployment caused by a mismatch between

the skills that workers in the economy can offer, and the skills demanded of workers by
employers. Structural unemployment is often brought about by technological changes that make
the job skills of many workers obsolete.

Structural unemployment is caused by external processes or events that trigger fundamental

changes in the economy. To help further, we can look at a graph.

The structural unemployment graph represents the industrial wage on the y-axis while
representing the labor force on the x-axis. The graph helps us understand the dynamics of labor
demand and supply, which play a significant role in the unemployment rate. The downward
slope indicates the demand for labor curve, which states employers demand less labor as the
wage rate increases. It means employers hire fewer workers as the wage rate goes up. The
upward slope of the graph represents the supply of labor curve, indicating that more workers
prefer employment opportunities with increasing wage rates. It suggests that more workers are
willing to work as the wage rate increases.

There are a lot of reasons why structural unemployment might take place. Some of them are -
 - Technological changes- Technological advancements can significantly affect an
economy. The introduction of new technologies can cause some of the existing jobs to
become obsolete, leaving many people unemployed.
- Competition - Competition is another factor that can lead to structural unemployment in
an economy. For example, globalization is one of the driving forces behind increased
competition around the world.
- Changes in consumer preferences or shifts in the global economy: It can cause specific
industries to decline, decreasing demand for workers in those industries.
- Demographic shifts: Changes in population demographics, such as aging or migration
patterns, can affect demand for specific types of labor, resulting in unemployment in
particular regions or industries.

There are a number of ways to overcome structural employment like education and training and
government assistance. This might not always be bad for the economy and there is an upside to
this as well. In conclusion, there are a number of reasons why an economy might go into
structural unemployment.