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Unemployment - Structural

Author

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  • Lindbeck, Assar

    (Institute for International Economic Studies, Stockholm University)

Abstract

Structural unemployment differs from cyclical unemployment by not disappearing in cyclical booms. In economic theory, structural unemployment is usually analysed in terms of the concept of equilibrium unemployment (the "natural unemployment rate" in Friedman’s terminology). Two elaborate concepts of equilibrium unemployment – the non-accelerating inflation rate of unemployment (the NAIRU) and the unemployment rate that induces firms and workers to accept the same real wage (the PS-WS-model) are used as analytical framework for the paper. These models are also related to search models for the labour market, in which unemployment equilibrium is defined as a situation where the number of individuals finding jobs equals the number of individuals who are separated from jobs. But it is argued in the paper that it is reasonable to widen the concept of structural unemployment to also include unemployment persistence, that is, a tendency for unemployment to continue to be high for quite a while also after temporary unemployment-creating shocks. The paper pinpoints various factors that influence the level of structural unemployment, which differs in time and place. It ends with a discussion of how structural unemployment is influenced by policy actions.

Suggested Citation

  • Lindbeck, Assar, 1999. "Unemployment - Structural," Seminar Papers 676, Stockholm University, Institute for International Economic Studies.
    • Handle: RePEc:hhs:iiessp:0676
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    References listed on IDEAS

    as
    1. Gottfries, Nils & Horn, Henrik, 1987. "Wage Formation and the Persistence of Unemployment," Economic Journal, Royal Economic Society, vol. 97(388), pages 877-884, December.
    2. Lawrence F. Katz & Bruce D. Meyer, 1990. "Unemployment Insurance, Recall Expectations, and Unemployment Outcomes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(4), pages 973-1002.
    3. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Schilirò, Daniele, 2004. "Occupazione e crescita in Italia [Employment and growth in Italy]," MPRA Paper 47161, University Library of Munich, Germany.
    2. Afful, Efua Amoonua, 2014. "Does Employment Protection Legislation Induce Structural Unemployment? Evidence from 15 OECD Countries," MPRA Paper 56875, University Library of Munich, Germany.

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    More about this item

    Keywords

    equilibrium unemployment; structural unemployment; stock and flow equilibrium in the labour market; unemployment persistence;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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