Frictional Unemployment Definition

Frictional Unemployment

Reviewed by Raphael Zeder | Published Aug 17, 2019

Definition of Frictional Unemployment

Frictional Unemployment is defined as the unemployment that results because people are in the process of moving between jobs. That means this type of unemployment occurs because most people need some time after quitting a position to search for the jobs that best suit their tastes and skills.

Example

To illustrate this, imagine you have two friends, Jenny and John. Jenny is a 35-year-old teacher in Southern California, and John is a 22-year-old student at the University of Southern California (USC). Jenny has been teaching at a local high school for several years. Now she feels like it’s time for a change and quits her job. It takes her a few weeks after leaving before she finds her new dream job. During this period, she is between jobs and therefore contributes to frictional unemployment.

Similarly, John is looking for his first job just weeks after his graduation. He graduated cum laude and has several job interviews lined up already, so it should be no problem for him to find employment. However, in the meantime, he does not have a job and therefore contributes to frictional unemployment.

Why Frictional Unemployment Matters

Frictional unemployment is an essential part of every economy with a free moving workforce. Even in the strongest and healthiest economies, workers need time to transition between jobs. Thus, even though it’s a short-term form of unemployment, there is no way for an economy to get rid of it in the long run.

However, frictional unemployment is actually considered beneficial to the economy as a whole. The reason for this is that it allows workers to find better employment where they can work more effectively. Similarly, employers can choose from a larger pool of qualified candidates when they are looking to fill positions. And finally, due to its short-term nature, this form of unemployment does not require as much government resources (e.g., unemployment benefits) as other forms of unemployment.