The
idea that a certain percentage of the
unemployed work force have no
skills that can be used
productively by
employers.
Structural Unemployment and
Frictional unemployment account for approximately 4.5% of the unemployed work force, and is excluded from calculating
Potential GDP. Therefore, if there is 7% of the work force unemployed at a particular
time, roughly 4.5
percentage points of that 7% is either
frictionally or
structurally
unemployed and not truly available to work. Therefore, the
economy is actually operating at about 2% less than full employment
potential.