Suppose that over a period of years the country of Quasiland switched from being an agriculturally-based economy to a technologically-based economy. As a result, many people lost jobs because they lacked the correct skills. As they search for new jobs, these people are part of
A) frictional unemployment.
B) cyclical unemployment.
C) structural unemployment.
D) discouraged workers.

Question

Quizplus · Accepted Answer

Structural unemployment occurs when the structure of the economy changes and there is a mismatch between the skills that workers have and the skills that employers need. In this scenario, the shift from agriculture to technology created a structural change in the economy, resulting in the loss of jobs for those who lacked the necessary technological skills. Frictional unemployment refers to temporary unemployment that arises when people are between jobs or searching for new jobs, which may apply to some of the displaced workers. Cyclical unemployment results from a downturn in the business cycle and is not applicable in this scenario. Discouraged workers have given up looking for work and therefore are not part of the unemployed labor force.

Suppose That Over a Period of Years the Country of Quasiland