What is structural unemployment? Why is a certain amount of frictional unemployment probably necessary in a well-functioning economy?

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Reeves

Business

5 January, 05:24

What is structural unemployment? Why is a certain amount of frictional unemployment probably necessary in a well-functioning economy?

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Madalynn · Answer 1

Structural unemployment is a type of unemployment which is not caused by business cycles. frictional unemployment is necessary to keep economy dynamic.

Explanation:

Structural unemployment is that type of unemployment which is caused by factors other than business cycle. It is generally caused because of a mismatch between what firms want and what workers have to offer.

Frictional unemployment arises when workers have to shift from one job to another.

An economy is dynamic, so it keeps changing. New jobs are being created and old are destroyed. So, workers keep moving from one job to another.

Thus, we can say certain level of frictional unemployment is required to keep economy dynamic.