Chapter 7: Problem 26

What is frictional unemployment? Give examples of frictional unemployment.

Short Answer

Expert verified

Frictional unemployment occurs when workers are temporarily between jobs, transitioning from one occupation to another, or searching for new employment opportunities. This type of unemployment is short-term and natural, as the workforce evolves to match market demands. Examples of frictional unemployment include recent college graduates searching for a job, seasonal workers during the off-season, workers changing careers, and individuals relocating to a new city or country. While it can cause temporary economic concerns for individuals, frictional unemployment facilitates overall economic growth and development in the long run.

Step by step solution

Definition of Frictional Unemployment

Frictional unemployment is a type of unemployment that occurs when workers are temporarily between jobs, transitioning from one occupation to another, or searching for new employment opportunities. It is a natural and expected part of a labor market, as workers are always moving between jobs due to personal choices, changing labor demands, or location. Frictional unemployment is typically short-term and not considered a significant problem, as the workforce constantly evolves to match market demands.

Example 1: Recent College Graduates

Recent college graduates are an example of frictional unemployment. Upon graduation, many students will actively search for a job related to their degree field. It usually takes some time for them to find a suitable job that matches their skills and interests, during which they are considered frictionally unemployed.

Example 2: Seasonal Workers

Seasonal workers also contribute to frictional unemployment. Often, these workers are employed for a certain period (e.g., during the holiday season) and then become unemployed when that period ends. The time they spend searching for a new job or waiting for the next season of work would classify them as frictionally unemployed.

Example 3: Career Changes

Workers who decide to change careers also experience frictional unemployment. This may be due to a variety of reasons, such as personal interests, new opportunities, or changes in industry demand. The time spent searching and transitioning to a new career will result in frictional unemployment until a new job is secured.

Example 4: Relocation

Individuals who relocate to a new city or country for personal or professional reasons also contribute to frictional unemployment. These workers need to find new employment in their new location, and the time taken during this job search process is considered as frictional unemployment. In conclusion, frictional unemployment is an expected and natural part of any labor market, as workers continuously explore new career opportunities, relocate to different regions, or experience seasonal gaps in employment. It is typically short-term, and while it can cause temporary economic concerns for individuals, it helps facilitate overall economic growth and development in the long run.