| Line | Structural unemployment—the unemployment |
| that remains even at the peak of the economy’s | |
| upswings—is caused by an imbalance between the | |
| types and locations of available employment on the | |
| (5) | one hand and the qualifications and locations of |
| workers on the other hand. When such an imbalance | |
| exists, both labor shortages and unemployment may | |
| occur, despite a balance between supply and demand | |
| for labor in the economy as a whole. | |
| (10) | Because technological change is likely to displace |
| some workers, it is a major factor in producing | |
| structural unemployment. While technological | |
| advance almost invariably results in shifts in | |
| demands for different types of workers, it does not | |
| (15) | necessarily result in unemployment. Relatively small |
| or gradual changes in demand are likely to cause | |
| little unemployment. In the individual firm or even in | |
| the labor market as a whole, normal attrition may | |
| be sufficient to reduce the size of the work force in | |
| (20) | the affected occupations. Relatively large or rapid |
| changes, however, can cause serious problems. | |
| Workers may lose their jobs and find themselves | |
| without the skills necessary to obtain new jobs. | |
| Whether this displacement leads to structural | |
| (25) | unemployment depends on the amount of public and |
| private sector resources devoted to retraining and | |
| placing those workers. Workers can be encouraged | |
| to move where there are jobs, to reeducate or retrain | |
| themselves, or to retire. In addition, other factors | |
| (30) | affecting structural unemployment, such as capital |
| movement, can be controlled. | |
| Increased structural unemployment, should it occur, | |
| makes it difficult for the economy to achieve desired low | |
| rates of unemployment along with low rates of inflation. | |
| (35) | If there is a growing pool of workers who lack the |
| necessary skills for the available jobs, increases in total | |
| labor demand will rapidly generate shortages of qualified | |
| workers. As the wages of those workers are bid up, | |
| labor costs, and thus prices, rise. This phenomenon | |
| (40) | may be an important factor in the rising trend, observed |
| for the past two decades, of unemployment combined | |
| with inflation. Government policy has placed a priority on | |
| reducing inflation, but these efforts have nevertheless | |
| caused unemployment to increase. |
The passage suggests that the phenomenon of combined unemployment and inflation is