structural unemployment

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Unemployment due to a lack of capital equipment which unemployed workers could use, or lack among unemployed workers of the skills necessary to produce anything for which there is a market. This can occur because investment has failed to keep pace with growth in the labour force: this is common in less developed countries. It can also occur because of changes in demand, leading to the decline of industries which previously provided jobs. Structural unemployment cannot be cured by increasing effective demand, which would remedy Keynesian unemployment, or by cutting wages, which would cure classical unemployment; its cure requires major investment in new industries, or large-scale migration from depressed areas.

Subjects: Economics.

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