How do mismatches in skills contribute to structural unemployment?

Mismatches in skills significantly contribute to structural unemployment because they indicate a gap between the skills that workers possess and those that are needed by employers in the job market. This misalignment occurs when the economy evolves or when specific industries experience growth while others decline, leading to changing demands for particular skills. For instance, advancements in technology may require workers to have specific technical skills that many current employees may lack, resulting in a situation where qualified candidates are scarce for certain jobs, while others remain unemployed.

As a result, workers who cannot adapt or acquire the new skills needed will remain unemployed, despite the availability of jobs in sectors that require different skill sets. This situation differs fundamentally from cyclical unemployment, which is linked to economic downturns, as structural unemployment highlights the inherent skill mismatches rather than a lack of available positions.