What is Frictional Unemployment?

What is Frictional Unemployment?

Definition

Frictional unemployment exists when individuals are out of work but are likely to be re-employed soon. It is usually a period when a job seeker is temporarily unemployed as he or she is in the process of looking for a suitable position.

What does frictional unemployment mean?

Frictional unemployment is at its highest when the economy is robust. At this stage of the economic cycle, people are willing to leave their existing jobs in search of a better one, as they are confident that they will get hired soon.

Why does frictional unemployment arise? Consider the dilemma that a new college graduate faces. Should she take the first job that she can get or wait till she finds one that is to her liking? Many new graduates delay entering the workforce until they find a job that matches their training and skills. This is one of the reasons for frictional unemployment.

The concept of frictional unemployment can become clearer by understanding the meaning of the word, “friction.” Friction refers to the resistance that an object faces when moving. Similarly, when a person is moving from one job to another, there is a certain amount of friction. The process may be slow as it could take time to find the best available opportunity.

Example of frictional unemployment

Here are a few examples of frictional unemployment:

⇨ Samantha graduated from college but is unable to find a job that matches her skills. She chooses to remain unemployed rather than take up work for which she is over-qualified.

⇨ Susan’s husband finds a job in a different city. Consequently, Susan resigns from the company where she works and moves with her husband.

⇨ Sarah is unhappy at her current job as the hours are very long. She quits and starts looking for alternate employment.

Summary

Frictional unemployment is voluntary and short-lived. It arises when individuals switch jobs or delay employment until they find work that matches their requirements.