Structural Imbalance in the U.S. Urban‐Economic System, 1960–1965*

Though perhaps disagreeing as to their relative importance, most economists would recognize two major types of unemployment: demand deficient unemployment, which is associated with the inadequacy of overall demand and appears as a characteristic of business cycle fluctuations, and unemployment caused by dislocations in labor market functioning [ I , 3, 81.The second type can be subdivided in turn on the basis of the length of unemployment.Frictional unemployment is short-term and reflects normal labor market adjustments arising from the lack of instant mobility in the labor force.Structural unemployment comes about in the long run regardless of the level of aggregate demand as changes in technology, consumer preferences, and locational patterns of industry and population combine to produce a mismatching of labor demand and supply in local labor markets.It results from the inability or failure of labor to adapt to these structural changes and often this unemployment is especially noticeable for long periods of time in specific industries in particular areas.Interregional variations in the level of structural unemployment reflect a state of spatial disequilibrium in an economy as local employment opportunities change faster than the labor force adjusts.In this paper attention is focussed on the incidence of such long-term structural unemployment in the U.S. urban system.The concept of structural unemployment is operationally defined and a simple model is developed to estimate empirically the degree of structural imbalance within the system over time.The model is applied to 140 major urban areas over the time period May, 1960 to July, 1965.