Financial Terms
Structural Unemployment

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Definition of Structural Unemployment

Structural Unemployment Image 1

Structural Unemployment

unemployment due to a mismatch between the skills or location of labor and the skills or location required by firms.



Related Terms:

Unemployment rate

The ratio of the number of people classified as unemployed to the total labor force.


Cyclical Unemployment

unemployment that increases when the economy enters a recession and decreases when the economy enters a boom.


Frictional Unemployment

unemployment associated with people changing jobs or quitting to search for new jobs.


Institutionally Induced Unemployment

unemployment due to institutional phenomena such as the degree of labor force unionization, the level of discrimination, and government policies such as unemployment insurance programs, minimum wages, or regulations on business.


Natural Rate of Unemployment (NRU)

The level of unemployment characterizing the economy in long-run equilibrium, determined by the levels of frictional, structural, and institutionally induced unemployment. At this rate of unemployment, inflation should be constant, so it is sometimes called the nonaccelerating inflation rate of unemployment, or NAIRU.


Structural Deficit

The budget deficit in excess of the deficit that in the long run keeps constant the ratio of the publically held national debt to GDP.


Unemployment Insurance

A program in which workers and firms pay contributions and workers collect benefits if they become unemployed.


Structural Unemployment Image 2

Unemployment rate

Fraction of the labor force that is not employed.


Federal Unemployment Tax Act (FUTA)

A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a
pool of funds to be used for unemployment benefits.


 

 

 

 

 

 

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