[netcan]

I agree with you that the reason many proponents of structural believe it is that it is consistent with their existing ideas about free markets and such, but that doesn't necessarily discredit it. There were bubbles that popped in finance and construction. This should produce a surplus of labour in these areas that needs to be absorbed.

I'm not an expert, but I don't think that a structural unemployment explanation is necessarily incompatible with with Keynes. Keynes talks about sticky prices disrupting the classical economic reallocation of resources. This would make sense especially for labour. If you need to go from an 80k job in finance to a 40k job in retail, you would probably be very reluctant and meanwhile be unemployed. That's, to the best of my understanding, a structural explanation.