When production in a particular industry ceases due to long term changes in demand or production techniques. This type of unemployment can persist for long periods if an industry accounted for a large proportion of jobs in a particular region as this means there will be relatively few alternative jobs for workers to turn their skill sets to.
Below is an illustration of the impact of structural unemployment on the economy. For example if a steel company closed down in the UK this is likely to make lots of people unemployed for a long period of time, because these workers might not be able to afford to migrate to other parts of the country to take work in a new steel mill or workers skills become defunct and they struggle to settle into another industry. As this shrinks the capacity of the economy it causes the LRAS curve to shift inwards and creates a permanently higher level of unemployment.
