VirtualSC Economics Honors Practice Exam

Technological changes in the market often lead to structural unemployment. This type of unemployment occurs when advancements in technology render certain skills obsolete, resulting in a mismatch between the skills workers possess and the skills needed for available jobs. For instance, if a factory implements automation that requires fewer workers with different skill sets, individuals who previously held jobs there may find themselves unemployed and lacking the necessary qualifications for new roles created by this technological shift.

Cyclical unemployment, on the other hand, is tied to the economic cycle and occurs during downturns when demand for goods and services decreases. Frictional unemployment involves the time it takes for workers to move between jobs, reflecting short-term transitions rather than structural changes in the job market. Seasonal unemployment is linked to specific industries that fluctuate with the seasons, such as agriculture and tourism, rather than shifts caused by technology.

Therefore, the impact of technological change on employment dynamics directly aligns with structural unemployment, as it fundamentally alters the labor needs and the skills required in the market.