ABSTRACT
Ever since Ricardo’s famous remarks in 1821 and the ensuing debate, economists have recognized the two-edged nature of technical change: that it both destroys old jobs and creates new ones. In general, economists have argued that the job creation effects have in the long run outstripped the job destruction effects, albeit accompanied by a steady reduction in working hours throughout the nineteenth and twentieth centuries. Nobody has claimed, however, that ‘compensation’ is automatic, painless or instantaneous. As Ricardo pointed out, the new jobs may not match the old ones either with respect to skill or to location. Where the mismatch is severe and/or prolonged, economists speak of ‘structural unemployment’ and the problems of ‘structural adjustment’ although the precise borderline between ‘structural’ and the more usual everyday ‘frictional’ unemployment is not always easy to define precisely. Nevertheless, the existence of some fairly severe problems of structural unemployment from the 1970s to the 1990s is now universally recognized, as has become obvious from the rapid increase and high rates of ‘long-term’ unemployment or non-employment in most developed countries in the 1990s. 1
