What is structural unemployment? How does structural unemployment arise on a geographic basis?

Structural unemployment occurs when there is a mismatch between the skills demanded and supplied in a given area or when such a mismatch exists across areas.  Structural unemployment can arise geographically because of impediments to mobility or to retraining.  If demand for labor drops in a given area or region, the real wage in the area should decrease and the local labor market should re-equilibrate as some workers relocate elsewhere where the real wage is higher while others drop out of the labor force altogether.  If workers are reticent to move elsewhere, however, unemployment will remain above the frictional level.  Factors that impede worker mobility are poor information regarding employment opportunities elsewhere, direct monetary expenses of moving, and psychic costs of moving away from family, friends, and familiar social institutions.  Retraining costs may also impede mobility out of a depressed area.  For example, jobs lost in the depressed area due to the adverse demand shift may have been predominantly blue collar in a specific declining industry, while jobs elsewhere may necessitate different skill sets requiring significant investments in human capital on the part of would be movers.