ACCA Applied Knowledge · Business and Technology · Macroeconomic factors
A town's main employer, a coal mine, closes permanently because the industry has declined. Former miners have no skills for the new software firms that have opened in a city 300 km away. Which type of unemployment is the miners' main problem?
The miners face structural unemployment. Their industry has declined permanently, and their skills and location do not match the available vacancies in the software sector. Retraining and mobility, rather than higher aggregate demand, are the usual remedies.
- AStructural unemploymentCorrect
- BFrictional unemployment
- CCyclical unemployment
- DVoluntary unemployment caused by search time
Explanation
The decline of an industry combined with a mismatch of skills and location between job seekers and vacancies is structural unemployment. It is not frictional, since the miners are not simply between jobs, and not cyclical, since the cause is long-term industry change rather than a fall in aggregate demand.
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