Answer to Question #282774 in Macroeconomics for Tenn

Question

If technological change increases structural unemployment, why do most governments and economists encourage such change?  

• Definition of technological change
• Definition of structural unemployment
• Impact of technological change on employment
• Impact of technological change on future production
• Impact of technological change on the economy
• How does an economy recover from structural unemployment?
• What government actions help to facilitate this recovery?

Answer 1

Technological change

Technological change refers to an increase in efficiency of a production process that ends up in an increase in the output.

Structural unemployment

Structural unemployment refers to the type of unemployment that comes as a result of difference in the skills possessed by the unemployed population and the jobs that exist in the market.

Impact of technological change on employment

Increase in labor productivity allowing firms to produce more output with the same level of input.

Reduction in the need for routine mechanized work.

Increase in demand and pay for high skilled technical and analytical work.