Frictional Unemployment with Examples, Causes,

and Rates
Frictional unemployment is when workers are jobless and looking for work in a healthy
economy. It does not matter if they leave voluntarily or are fired. Others may be returning to
the labor force. It is differentiated from other types of unemployment because it's part of
normal labor turnover. It is one of the components of natural unemployment.
Causes
Why does frictional employment exist? It would be more logical for workers to hold on to their
existing jobs until they find new ones. But often workers must move for unrelated reasons
before they can look for new jobs. Some marry and must move to be near their spouse's job.
Many take time off to care for relatives. Some have saved enough money so they can quit
unfulfilling jobs. They have the luxury to search until they find just the right opportunities.
During a recession, frictional unemployment drops. Why? Workers are afraid to quit their jobs
even if they don't like them. They know it will be difficult to find better ones.
Effects
Frictional unemployment is not harmful to an economy. It is not like cyclical
unemployment that results from a recession. That is when businesses lay off employees
whether they like their jobs or not. An increase in frictional unemployment means
more workers are moving toward better positions.
In fact, frictional unemployment benefits the economy. It allows companies more opportunities
to find qualified workers. If everyone stayed in their jobs until they found new ones, it would
be harder for companies to bring on good workers. Labor costs would rise, creating cost-push
inflation. Workers' pay would increase, reducing U.S. income inequality.
Examples
Others are workers who move to a new town without lining up another job. Some people quit
abruptly, knowing they'll get a better job shortly. Still, others might decide to leave the
workforce for personal reasons such as retirement, pregnancy, or sickness. They drop out of the
labor force. When they return and start looking again, they're counted as part of frictional
unemployment.
Amadeo, K. (2019, January 2019). Frictional Unemployment with Examples, Causes, and Rates.
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