Unemployment caused by a mismatch between workers' skills and job requirements—often due to technological change or industrial shifts—is called what?

• A. Structural unemployment
• B. Frictional unemployment
• C. Cyclical unemployment
• D. Seasonal unemployment

Answer: (A)

Structural unemployment is about a lasting mismatch between the skills workers have and the skills those jobs require, often driven by technology or shifts in industries. When automation or changes in what the economy demands reduce demand for certain skills and increase demand for others, workers can be unemployed for a long time unless they retrain or relocate. This differs from frictional unemployment, which is short-term and related to job-search transitions; cyclical unemployment, which stems from weaker overall demand in the economy; and seasonal unemployment, which follows predictable yearly patterns. A good example is workers whose manufacturing skills become obsolete due to automation and who need retraining to find work in higher-skilled or different sectors.