Frictional unemployment

Frictional unemployment is a short term, temporary type of unemployment which occurs when individuals change their jobs. As such, frictional unemployment is regarded as a minor type of unemployment in comparison with structural or cyclical unemployment.

Examples

Individuals can be frictionally unemployed for a variety of reasons, including:

  1. Voluntary redundancies, where individuals leave a job because that job no longer exists - perhaps as a result of the business restructuring.
  2. New graduates who are searching for their first employment.
  3. Individuals who have recently migrated from abroad, and have the appropriate work visa, but have not yet found work.
  4. Some individuals will be relocating - perhaps as a result of marriage (or divorce) and are looking for work. While many will move seamlessly between jobs, some will remain jobless for a short time.
  5. Individuals leaving a job because they have been offered a better one, but where the start date does not coincide with the date the left their previous employment.
  6. Individuals who have previously left the labour market (perhaps to have a family, or to care for others), but are now looking to rejoin, and are searching for work.

Remedies

In most modern economies the private sector is heavily involved in matching job seekers to jobs, through employment services such as monster.com, indeed.com, reed.co.uk, and hays.co.uk.

However, this does not mean that governments should not intervene to reduce the rate of frictional unemployment. Schemes which governments might support include:

Providing better information so that workers can move more quickly between jobs.

Establishing a national 'jobs bank' which attempts to match job seekers with potential applicants.

Removing labour market rigidities, including reducing unemployment benefits, or reducing the length of time individuals can receive benefits


Structural unemployment

What is structural unemployment?

Structural unemployment
Taxation

How can taxes regulate consumption?

Taxation
Supply-side policy

How effective is supply-side policy?

Supply-side policy