Structural unemployment is due to mismatch between available jobs and workers.
We formalize this concept in a simple model of a segmented labor market with search
frictions within segments. Worker mobility, job mobility and wage bargaining costs
across segments generate structural unemployment. We estimate the contribution of
these costs to fluctuations in US unemployment, operationalizing segments as states
or industries. Most structural unemployment is due to wage bargaining costs, which
are large but nevertheless contribute little to unemployment fluctuations. Structural
unemployment is as cyclical as overall unemployment and no more persistent, both
in the current and in previous recessions.