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Q61 (CDS-I/2023) Economy › Growth, Development, Poverty & Employment › Macroeconomic indicators Answer Verified

The unemployment that occurs due to changes in the technology or in the demand for particular products is called (a) frictional unemployment (b) structural unemployment (c) cyclical unemployment (d) disguised unemployment

Result
Your answer: —  Â·  Correct: B
Explanation

Structural unemployment occurs due to fundamental changes in the economy, specifically shifts in technology or the demand for particular products. Unlike cyclical unemployment, which is tied to the business cycle and overall demand [2], structural unemployment arises from a mismatch between the skills workers possess and the skills required by employers. For instance, technological advancements like automation can make certain manual labor jobs obsolete, requiring workers to acquire new skills to remain employable. This type of unemployment is often long-term because it requires significant time for workers to retrain or relocate to industries where their labor is still in demand [2]. While frictional unemployment involves temporary transitions between jobs [3], structural unemployment reflects deeper, permanent shifts in the industrial structure or production techniques of a country [4].

Sources

  1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > Different types of Unemployment: > p. 272
  2. [2] https://www.rba.gov.au/education/resources/explainers/unemployment-its-measurement-and-types.html
  3. [3] https://www.imf.org/external/pubs/ft/fandd/basics/unemploy.htm
  4. [4] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 3: Poverty, Inequality and Unemployment > 5. Chronic Unemployment > p. 51
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