Final answer:
Hysteresis is the term for the long-term impact on unemployment caused by an economic downturn that results in a loss of skills among workers. As a result, even when the economy recovers, the equilibrium unemployment rate may be higher due to structural problems in matching workers with jobs. Advisable steps to prepare for potential unemployment include looking for better job opportunities while employed, building a financial safety net, and understanding the application process for unemployment benefits.
Step-by-step explanation:
Long-term unemployment from a severe economic downturn can cause unemployed workers to lose skills, making it harder for them to find jobs even after the economy improves. This effect is known as hysteresis, which refers to the long-lasting impact from temporary causes. It is not considered 'natural unemployment' which refers to the baseline unemployment rate due to factors like frictional and structural unemployment, and it is different from being marginally attached or cyclical unemployment which fluctuates with the economy's performance.
The long-term unemployed may face a higher equilibrium unemployment rate because the skills mismatch, caused by extended periods of unemployment, can become a persistent structural issue. Therefore, when good economic conditions return, frictional unemployment decreases as people find jobs more easily, but structural issues might keep the equilibrium unemployment rate higher than before the downturn.
For someone concerned about potential unemployment, it's advisable to be proactive by continuously seeking better job opportunities, building a financial safety net or 'nest egg', and understanding the process of applying for unemployment benefits, should the need arise. However, it is important to note that unemployment compensation generally cannot be applied for until after one becomes unemployed.