Which type of unemployment occurs due to changes in production methods that cause a mismatch of skills?

• A. Seasonal unemployment
• B. Cyclical unemployment
• C. Frictional unemployment
• D. Structural unemployment

Answer: (D)

When production methods change, the demand for skills in the economy can shift. Structural unemployment happens when these long‑term changes leave workers with skills that no longer match the jobs that exist, and there isn’t an easy way for them to move into the new roles. Because the mismatch is built into the economy’s structure, the unemployment tends to persist and may require retraining or relocating to find suitable work. For example, automation or new technology in manufacturing may reduce demand for certain manual tasks while increasing demand for programming, maintenance, or system design skills. This differs from seasonal unemployment (related to regular seasonal patterns), frictional unemployment (short-term between jobs during job hunting), and cyclical unemployment (linked to economic downturns).