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Chapter 21: Problem 26

What is frictional unemployment? Give examples of frictional unemployment.

Short Answer

Expert verified
Frictional unemployment is a temporary period of joblessness experienced by workers who are either searching for a new job or transitioning between jobs, reflecting the flexibility and freedom in a healthy economy for workers to change jobs in search of better opportunities. Examples include a recent college graduate searching for their first full-time job, a worker who has relocated and is looking for a job in their new location, and an individual changing career paths and searching for a new job in their desired field.

Step by step solution

01

Define frictional unemployment

Frictional unemployment occurs when there is a temporary period of joblessness experienced by workers who are either searching for a new job or in the process of transitioning between jobs. It is generally considered a natural form of unemployment that exists in a healthy economy, as it indicates that workers have the flexibility and freedom to change jobs in search of better opportunities.
02

Provide examples of frictional unemployment

Example 1: A recent college graduate is searching for their first full-time job in their chosen field. They are currently unemployed, but actively looking for work and attending interviews, making their unemployment frictional. Example 2: A worker who has left their current job due to a relocation or personal reasons is temporarily unemployed while they search for a new job in their new location. Their unemployment is also frictional. Example 3: An individual who decides to quit their current job to pursue a different career path experiences frictional unemployment during the time it takes them to find a new job in their desired field.

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Most popular questions from this chapter

What type of unemployment (cyclical, frictional, or structural) applies to each of the following: a. landscapers laid off in response to a drop in new housing construction during a recession. b. coal miners laid off due to EPA regulations that shut down coal fired power c. a financial analyst who quits his/her job in Chicago and is pursing similar work in Arizona d. printers laid off due to drop in demand for printed catalogs and flyers as firms go the internet to promote an advertise their products. e. factory workers in the U.S. laid off as the plants shut down and move to Mexico and Ireland.

Is the increase in labor force participation rates among women better thought of as causing an increase in cyclical unemployment or an increase in the natural rate of unemployment? Why?

While unemployment is highly negatively correlated with the level of economic activity, in the real world it responds with a lag. In other words, firms do not immediately lay off workers in response to a sales decline. They wait a while before responding. Similarly, firms do not immediately hire workers when sales pick up. What do you think accounts for the lag in response time?

Under what condition would a decrease in unemployment be bad for the economy?

Why do you think that unemployment rates are lower for individuals with more education?
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