Structural unemployment is sometimes said 10 rcsul Ifrom a mismatch between the job skills that cm ploycrswant and the jobs iUs that workcrs have. To explore this idea, consider an cconom}' with two industries:auto manufacturing and aircraft manufacturing.a. If workers in these n.,-o industries require similaramounts of training, and if workers al the begin11.ing of thcir ca.rccrs can chaos., which industry totrain for, what would you expect lo happen to thewages in thcs., two industries? How long wouldthis process take? Explain.b. Suppose tha t one day the economy opens itself tointernational trade and, as a result, startsimporting autos and exporting aircraft. Whatwould happen to the d"mand for labor in thesetwo industries?c. Suppose tha t workers in one industry ca1uto1 bequickly retrained for the other. How would theseslu fts in demand affect equilibrium wages both inthe short run and in the long run?d. If for some reason wages fail to adjust to the newequilibrium levels, what would occur?
Structural
from a mismatch between the job skills that cm ploycrs
want and the jobs iUs that workcrs have. To explore this idea, consider an cconom}' with two industries:
auto manufacturing and aircraft manufacturing.
a. If workers in these n.,-o industries require similar
amounts of training, and if workers al the begin11.ing of thcir ca.rccrs can chaos., which industry to
train for, what would you expect lo happen to the
wages in thcs., two industries? How long would
this process take? Explain.
b. Suppose tha t one day the economy opens itself to
international trade and, as a result, starts
importing autos and exporting aircraft. What
would happen to the d"mand for labor in these
two industries?
c. Suppose tha t workers in one industry ca1uto1 be
quickly retrained for the other. How would these
slu fts in
the short run and in the long run?
d. If for some reason wages fail to adjust to the new
equilibrium levels, what would occur?
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