Note: This is post #101 in a weekly video series on basic economics.
As we saw in the last video, some forms of unemployment—such as short-term, frictional unemployment—can indicate a healthy, growing economy. But what about persistent, long-term unemployment?
When a large percentage of those who are considered unemployed have been without a job for a long period of time and this has been true for many years, it’s considered structural unemployment. Structural unemployment can result from shocks to an economy that drastically alter the labor market. “These shocks are not all bad—the rise of the Internet is one such example,” says Alex Tabarrok of Marginal Revolution University. “Regardless, it can take a while for an economy to adjust to big changes.”
(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)
Click here to see other videos in the Introduction to Economics series.