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Homework answers / question archive / Much publicity has been made about the rise in unemployment in manufacturing industries in the U
Much publicity has been made about the rise in unemployment in manufacturing industries in the U.S. during a period of sluggishness in trying to recover from the 2008-2009 recession. However, with the 2017 real GDP being close to its natural level, manufacturing firms complain that they have plenty of job openings but cannot find workers whose skills match up well with the positions. Apply the concepts of structural and cyclical unemployment to contrast this decline in manufacturing employment in a sluggish economy versus a healthy economy.
In a sluggish economy the reason for low employment is usually caused by a decrease in aggregate demand which is temporary and thus cyclical. It is simply part of the business cycle and is caused by people buying less goods which leads to less demand for labor.
In a healthy economy the reason for low employment in an industry is usually caused by structural problems usually related to the supply of labor. In such cases there is simply a skill mismatch in the economy that takes a long time to be fixed. This is because it takes time to learn new skills that are in demand and thus we call the problem structural.
