Natural or structural rate of unemployment occur when there are unemployed workforce when the labor market is at the equilibrium. At this point, there are vacancies in the market and workers but jobs and workers do not complement each other. This type of unemployment is voluntary.
The paper analyses the type of unemployment in the United States during 2007-2009 recession. The author achieves his objective by investigating on what the factors were led to unemployment in this period. First he analyses the impact of structural changes in different sectors during this period. In the analysis the researcher finds that changes in composition of labor force and cyclical adjustments in various industries led to unemployment in this period especially in the construction industry.
The paper also looks into mismatch employment as a cause of unemployment during this period; this problem was also in construction industry where there were many unemployed persons and many vacancies as well, however, this was temporary hence could not be referred as structural. This is because the same industries that caused unemployment during the recession were the same that reduced unemployment after the recession.
However, the researcher finds no evidence that unemployment during the recession was as a result of structural changes. It was found that during this time there was a substantive industry mismatch which would explain unemployment during recession. There is also a similarity between the 2007-2009 recession and prior recession, suggesting that all recessions have the same trend.
Unemployment is mostly as a result of industry mismatch and structural changes in the economy, therefore the policy should address to prevent industry mismatch by training required skills and prepare the labor force for possible structural changes in the economy.