What is Frictional Unemployment?

Woman holding a sign that says unemployedHave you ever heard the term “frictional unemployment”? Until recently, we had not heard of this term either. It turns out that there are several different kinds of unemployment that happen for specific reasons. We’ll discuss those in our next couple of posts.

Unemployment is measured by the Bureau of Labor Statistics. It is an important economic measurement used to assess the performance of the US economy.

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Frictional unemployment is a type of unemployment that arises when workers are temporarily between jobs and are searching for new employment.

It is called “frictional” because it results from the normal friction or movement of workers within the labor market, as they transition from one job to another.

This type of unemployment is considered a natural and inevitable part of a healthy and functioning economy, as workers change jobs for various reasons, such as seeking better pay, better working conditions, or greater job satisfaction.

Frictional unemployment can also result from a mismatch between the skills and qualifications of workers and the requirements of available jobs. For example, a worker who has been laid off from a job in a declining industry may take some time to find a new job that matches their skills and qualifications. This type of frictional unemployment is sometimes referred to as mismatch unemployment.

Overall, frictional unemployment is typically a short-term phenomenon and is not considered a major concern for the economy. However, in times of economic hardship, when the overall unemployment rate is high, frictional unemployment can be more prolonged, and it can be more difficult for workers to find new employment.

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