, structural change is a large-scale change in industry and industries thanks to feedback
from the profit-signalling mechanism
. If an industry begins to falter and fail, then resources will be moved out of this industry into other, more profitable
industries. This reallocation of resources
occurs as the businesses in the industry downsize
massively to try and survive in the new climate of decreased demand
This can have quite an effect on the labour market, as whole classes of workers may become redundant as their skills are no longer required by a failing industry.
There is also positive structural change which occurs when an industry enjoys a surge of profit - resources will be moved into this industry by businesses keen to take advantage of the opportunities for profits.
Reasons for structural change include changes in customer taste and technological change obsoleting products.