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The U.S. economy may have a lot of new jobs for financial analysts and nurses aides in the Southwest, for example. But these won’t do you much good if you live in the Northeast and have skills in engine assembly or web design. On the positive side, structural unemployment arises from what economist Joseph Schumpeter (1883-1950) called “creative destruction.” Schumpeter thought this was a good and necessary thing for capitalist economies. Technological and entrepreneurial innovations have often contributed to improved living standards, even though they cause some job opportunities to dry up. People skilled in outdated technologies buggy-whip manufacturing is a classic example—necessarily become unemployed. Society could have tried to prevent unemployment in buggy-whip manufacturing by banning the introduction of the automobile, but the cost in economic growth would have been immense. If we, today, begin to move away from internal combustion engines due to their negative environmental impacts, the conventional auto industry will decline just as the buggy-whip industry declined at the end of the horse-and-buggy era. New technologies, new markets, and new concerns create new opportunities. On the negative side, shifts in employment patterns by sector and industry are very disruptive, and often very painful, to the people who work in the declining sectors and to their families and communities. People in the declining sectors see the value of their specialized human capital depreciating rapidly. Whole towns and cities may become economically depressed when a major industry closes down, since the unemployed workers spend less at local businesses and property values plummet. Displaced workers may be able to train for a new career—especially if they are young and able to move to wherever the new jobs may be. But many displaced workers, particularly older ones, may never find the kind of pay and satisfaction that they had at their earlier occupations. Older displaced workers are more likely than younger ones to stay unemployed for long periods, or exit the labor force. Governments at all levels have tried various policies to prevent or alleviate structural unemployment. The governments of some countries, notably Germany and Japan in the 1980’s and 1990’s, have followed industrial policies through which they directly encourage the development and retention of certain key industries through loans, subsidies, and tax credits. During negotiations on international trade, one sensitive issue is always the impact that increased trade might have on the employment levels in various industries in each country. Government policies in the United States that target structural unemployment often focus on attempting to help displaced workers find new employment. For example, the Trade Adjustment Assistance Reform Act of 2002 provides benefits for certain worker displaced as a result of increased imports or the shifting of production to other countries. Workers who qualify for the program can receive retraining along with temporary income support payments and assistance with health insurance. The key feature of these programs is that they are targeted to particular workers, in particular sectors of the economy. There has been some question, however, as to whether they have actually been successful in getting displaced workers into new, good jobs. Business policies at the firm level are also relevant: firms can help prevent structural unemployment if they make re