Question

Distinguish between “Structural unemployment” and “cyclical (demand deficiency) unemployment

Answer 1

Structural unemployment refers to a situation where workers experience unemployment for a long period of time due to structural changes in the economy and its labor force. Under structural unemployment, jobs are available but there exists a great mismatch between what job markets need and what is offered by workers.

Cyclical unemployment on the other hand, is a type of unemployment caused by a recession or a downturn in an economy. It is temporary in nature and it generally rises during recessions and declines during economic expansions.