Explain why some regions of the UK suffer from structural unemployment

AQA AS Economics Paper 2 June 2024 Insert

Explain why some regions of the UK suffer from structural unemployment. (10 marks)

1. structural unemployment is when workers lose their job because an industry declines.
2. two reasons why some areas in the UK may suffer from structural unemployment are that there has been a large fall in demand for certain industries, and poor occupational mobility of labour.
3. firstly, industries, like steel, have declined heavily in the UK.
4. this is because countries like China are more competitive.
5. competitiveness is the ability to produce goods and services at a lower cost compared to another country.
6. low demand for UK steel means low demand for steel workers in the UK.
7. this is because demand for labour is derived from the demand for goods and services,
8. furthermore, structural unemployment can remain high if the government are unable to support the re-training of workers.
9. furthermore extract F, line 4 mentions that 'low levels of literacy' are more likely to exist in poor regions.
10. this suggests that certain areas of the UK have lower levels of skills, which makes it more difficult for those workers to get a job.
11. this leads to high levels of occupational immobility of labour, as workers are unable to apply for jobs in industries where there is more demand for labour.
12. this could be achieved through greater investment in education and training.
13. this would lead to a right shift in long-run aggregate supply, as workers would gain new skills which improves the productive potential of the economy.
14. the diagram below shows that this leads to an increase in output from y1 to y2 which shows that new work is being created.

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