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Structural unemployment—the unemployment that remains even at the peak

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Structural unemployment—the unemployment that remains even at the peak  [#permalink]

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New post Updated on: 27 Aug 2019, 05:16
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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 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.

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 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 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 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 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. 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 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.

RC00144-03
All of the following are mentioned as ways of controlling the magnitude of structural unemployment EXCEPT

A. using public funds to create jobs
B. teaching new skills to displaced workers
C. allowing displaced workers to retire
D. controlling the movement of capital
E. encouraging workers to move to where jobs are available

RC00144-04
The passage suggests that a potential outcome of higher structural unemployment is

A. increased public spending for social services
B. placement of workers in jobs for which they are not qualified
C. higher wages for those workers who have skills that are in demand
D. an increase in the length of time jobs remain unfilled
E. a shift in the government’s economic policy priorities

RC00144-05
It can be inferred from the passage that even when there are unemployed workers, labor shortages are still likely to occur if

A. the inflation rate is unusually high
B. there is insufficient technological innovation
C. the level of structural unemployment is exceptionally low
D. the jobs available in certain places require skills that the labor force in those areas lacks
E. the workers in some industries are dissatisfied with the pay offered in those industries

RC00144-06
The passage suggests that the phenomenon of combined unemployment and inflation is

A. a socioeconomic problem that can only be addressed by government intervention
B. a socioeconomic problem that can be characteristic of periods of structural unemployment
C. an economic problem that results from government intervention in management-labor relations
D. an economic problem that results from imperfect applications of technology
E. an economic problem that can be eliminated by relatively small changes in the labor force

RC00144-07
The passage is primarily concerned with

A. clarifying the definition of a concept
B. proposing a way to eliminate an undesirable condition
C. discussing the sources and consequences of a problem
D. suggesting ways to alleviate the effects of a particular social policy
E. evaluating the steps that have been taken to correct an imbalance

RC00144-08
According to the passage, small downward shifts in the demand for labor will not usually cause unemployment because

A. such shifts are frequently accompanied by upswings in the economy
B. such shifts usually occur slowly
C. workers can be encouraged to move to where there are jobs
D. normal attrition is often sufficient to reduce the size of the work force
E. workers are usually flexible enough to learn new skills and switch to new jobs






The Official Guide for GMAT Verbal Review 2018 New RC
OG 2019 ID's RC00144-03, RC00144-04, RC00144-05, RC00144-06, RC00144-07, RC00144-08

Originally posted by AbdurRakib on 15 Jun 2017, 05:31.
Last edited by SajjadAhmad on 27 Aug 2019, 05:16, edited 1 time in total.
Updated - Complete topic (292).
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New post 19 Jun 2017, 06:18
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Need a help on answering (Book Question: 8)

The passage suggests that the phenomenon of combined unemployment and inflation is
A. a socioeconomic problem that can only be addressed by government intervention
B. a socioeconomic problem that can be characteristic of periods of structural unemployment
C. an economic problem that results from government intervention in management-labor relations
D. an economic problem that results from imperfect applications of technology
E. an economic problem that can be eliminated by relatively small changes in the labor force

I could not reach to choice B anyhow... please help which line can lead to this answer in last para

Thanks in advance!!
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Re: Structural unemployment—the unemployment that remains even at the peak  [#permalink]

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New post 16 Jul 2017, 02:59
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KanakGarg wrote:
Need a help on answering (Book Question: 8)

The passage suggests that the phenomenon of combined unemployment and inflation is
A. a socioeconomic problem that can only be addressed by government intervention
B. a socioeconomic problem that can be characteristic of periods of structural unemployment
C. an economic problem that results from government intervention in management-labor relations
D. an economic problem that results from imperfect applications of technology
E. an economic problem that can be eliminated by relatively small changes in the labor force

I could not reach to choice B anyhow... please help which line can lead to this answer in last para

Thanks in advance!!

You can try eliminating one by one
A- contains only. Extreme generalisation
B- characteristics of stru. Unemployment.
C- First and second para never says govt has done anything to create this
D- technology is one factor but problem exist without technology.
E- not small changes but type and location both matters

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Re: Structural unemployment—the unemployment that remains even at the peak  [#permalink]

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New post 31 Jul 2017, 01:38
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KanakGarg wrote:
Need a help on answering (Book Question: 8)

The passage suggests that the phenomenon of combined unemployment and inflation is
A. a socioeconomic problem that can only be addressed by government intervention
B. a socioeconomic problem that can be characteristic of periods of structural unemployment
C. an economic problem that results from government intervention in management-labor relations
D. an economic problem that results from imperfect applications of technology
E. an economic problem that can be eliminated by relatively small changes in the labor force

I could not reach to choice B anyhow... please help which line can lead to this answer in last para

Thanks in advance!!


For me, choice B is from the following evidence:
This phenomenon may be an important factor in the rising trend, observed for the past two decades, of unemployment combined with inflation

in the passage, "this phenomenon" is that: Increased structural unemployment=>wages of shortage qualified workers are bid up, labor costs, and thus prices, rise.
the passage tell us that "this phenomena" is important factor to create a trend: "combined unemployment and inflation"
So this trend is characteristics of structural unemployment.
Analogy: people who have flu usually cough. So cough is a characteristic of flu.
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Re: Structural unemployment—the unemployment that remains even at the peak  [#permalink]

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New post 31 Jul 2017, 11:21
Hey there!

Can someone please help me on the last question - Question 10? I can't seem to understand why B is not a good enough option. The answer D is clearly cited in the passage, but it does not seem like a solid explanation for the question. While B is a concise, direct answer and that makes much more sense.

Thank you in advance.
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Re: Structural unemployment—the unemployment that remains even at the peak  [#permalink]

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New post 02 Aug 2017, 23:23
(Book Question: 10)
According to the passage, small downward shifts in the demand for labor will not usually cause unemployment because
A. such shifts are frequently accompanied by upswings in the economy
B. such shifts usually occur slowly
C. workers can be encouraged to move to where there are jobs
D. normal attrition is often sufficient to reduce the size of the work force
E. workers are usually flexible enough to learn new skills and switch to new jobs

In the above question, how is option D the correct answer? Can anyone explain? GMATNinja
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Re: Structural unemployment—the unemployment that remains even at the peak  [#permalink]

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New post 08 Aug 2017, 05:37
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pikolo2510 wrote:
(Book Question: 10)
According to the passage, small downward shifts in the demand for labor will not usually cause unemployment because
A. such shifts are frequently accompanied by upswings in the economy
B. such shifts usually occur slowly
C. workers can be encouraged to move to where there are jobs
D. normal attrition is often sufficient to reduce the size of the work force
E. workers are usually flexible enough to learn new skills and switch to new jobs

In the above question, how is option D the correct answer? Can anyone explain? GMATNinja


Hi! Let me try.
First D is mentioned in the passage here:
While technological advance almost invariably results in shifts in demands for different types of workers, it does not 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 the affected occupations. Relatively large or rapid changes, however, can cause serious problems.

When does unemployment occurs? When there is downward shifts in demand. But when this downward shift is small, passage says that it won't result in unemployment. Rather, firms may chose to "fire" few employees. Firing few employees (attrition) is not similar to unemployment-a situation caused by mass layoffs by multiple firms!
This is what D says: normal attrition is sufficient to reduce size of work force. No mass layoffs necessary to counter the change-if it is small.

Does it make sense?
Now I am not GMATNinja, but tried to help :)
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New post 08 Aug 2017, 05:49
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MarinaFD wrote:
Hey there!

Can someone please help me on the last question - Question 10? I can't seem to understand why B is not a good enough option. The answer D is clearly cited in the passage, but it does not seem like a solid explanation for the question. While B is a concise, direct answer and that makes much more sense.

Thank you in advance.
Marina



Hi I answered why D is correct in above post. Please refer it.
Now why B is not a good enough option:

Quote:
According to the passage, small downward shifts in the demand for labor will not usually cause unemployment because
B. such shifts usually occur slowly
D. normal attrition is often sufficient to reduce the size of the work force


Consider yourself CEO.
See this conversation:
Scenario D:
I (reporter) : Why aren't you giving pink slips to all employees (causing unemployment), given we have seen small downward shifts in demand for labor?
You: Because removing few people (normal attrition) is enough to tackle this small shift.

VS.

Scenario B:
I (reporter) : Why aren't you giving pink slips to all employees (causing unemployment), given we have seen small downward shifts in demand for labor?
You: Because the shift is occurring slowly.

Does it matter whether the demand lowers slowly or quickly? Passage says the small shift won't cause employment. Why? Because normal attrition is enough to counter these small shifts. Passage doesn't mention anything about how slowly or quickly the shift occurs and its effect on unemployment!


Hope I helped! :)
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New post 09 Aug 2017, 13:10
AkshayKS21 wrote:
MarinaFD wrote:
Hey there!

Can someone please help me on the last question - Question 10? I can't seem to understand why B is not a good enough option. The answer D is clearly cited in the passage, but it does not seem like a solid explanation for the question. While B is a concise, direct answer and that makes much more sense.

Thank you in advance.
Marina



Hi I answered why D is correct in above post. Please refer it.
Now why B is not a good enough option:

Quote:
According to the passage, small downward shifts in the demand for labor will not usually cause unemployment because
B. such shifts usually occur slowly
D. normal attrition is often sufficient to reduce the size of the work force


Consider yourself CEO.
See this conversation:
Scenario D:
I (reporter) : Why aren't you giving pink slips to all employees (causing unemployment), given we have seen small downward shifts in demand for labor?
You: Because removing few people (normal attrition) is enough to tackle this small shift.

VS.

Scenario B:
I (reporter) : Why aren't you giving pink slips to all employees (causing unemployment), given we have seen small downward shifts in demand for labor?
You: Because the shift is occurring slowly.

Does it matter whether the demand lowers slowly or quickly? Passage says the small shift won't cause employment. Why? Because normal attrition is enough to counter these small shifts. Passage doesn't mention anything about how slowly or quickly the shift occurs and its effect on unemployment!


Hope I helped! :)


Hey!

Thank you so much for the complete explanations, I completely understand now.

It makes a lot of sense, I think I didn't get the meaning of the text correctly and that is why I got the wrong answer.

Also, the examples were perfect, thanks again!

Marina


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Re: Structural unemployment—the unemployment that remains even at the peak  [#permalink]

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New post 03 Oct 2018, 18:12
2
P1 - wat is SU?
P2 - factors affecting SU + job loss is not bad. why?
P3 - effects of above thing

RC00144-03
All of the following are mentioned as ways of controlling the magnitude of structural unemployment EXCEPT

Workers can be encouraged to move where there are jobs, to reeducate or retrain themselves, or to retire. In addition, other factors affecting structural unemployment, such as capital movement, can be controlled.

A. using public funds to create jobs - correct; except this all are given in P2
B. teaching new skills to displaced workers -
C. allowing displaced workers to retire -
D. controlling the movement of capital -
E. encouraging workers to move to where jobs are available -

-------------------------------------
RC00144-04
The passage suggests that a potential outcome of higher structural unemployment is
As the wages of those workers are bid up,
C. higher wages for those workers who have skills that are in demand - yes

--------------------------------------

RC00144-05
It can be inferred from the passage that even when there are unemployed workers, labor shortages are still likely to occur if

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.

D. the jobs available in certain places require skills that the labor force in those areas lacks
----------------------------------------
RC00144-06
The passage suggests that the phenomenon of combined unemployment and inflation is

This phenomenon 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.

A. a socioeconomic problem that can only be addressed by government intervention - too extreme, not sure if it can be addressed by that.
B. a socioeconomic problem that can be characteristic of periods of structural unemployment - unemployment and inflation can be characteristic of SU.
C. an economic problem that results from government intervention in management-labor relations - no
D. an economic problem that results from imperfect applications of technology - not always.
E. an economic problem that can be eliminated by relatively small changes in the labor force - not always.

---------------------------------------

RC00144-07
The passage is primarily concerned with

A. clarifying the definition of a concept - p1
B. proposing a way to eliminate an undesirable condition - weak
C. discussing the sources and consequences of a problem - best of the lot.
D. suggesting ways to alleviate the effects of a particular social policy - no
E. evaluating the steps that have been taken to correct an imbalance - no

-----------------------------------------

RC00144-08
According to the passage, small downward shifts in the demand for labor will not usually cause unemployment because
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 the affected occupations.

D. normal attrition is often sufficient to reduce the size of the work force
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Re: Structural unemployment—the unemployment that remains even at the peak  [#permalink]

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New post 12 Nov 2019, 09:29
I don't know if this passage should be a 600-700 passage. I have seen way more difficult passages in this category.
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Re: Structural unemployment—the unemployment that remains even at the peak  [#permalink]

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New post 12 Nov 2019, 09:46
malvika2706 wrote:
I don't know if this passage should be a 600-700 passage. I have seen way more difficult passages in this category.


No problem is there with the difficulty level tag this is a 600 Level question

Thanks
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Re: Structural unemployment—the unemployment that remains even at the peak   [#permalink] 12 Nov 2019, 09:46
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