Frictional Unemployment Definition:
Frictional unemployment is when workers leave their jobs to find better ones. It's usually thought of as a voluntary exit, but can also occur as a result of a layoff or termination with cause. The time, effort and expense it takes to find these new jobs is known as friction. It occurs because workers need to find out about possible new job opportunities, go on interviews and possibly move before starting their new jobs. It's an unavoidable part of the job search process. However, the good news is that it's usually short-term. Causes of Frictional Unemployment:
Why does frictional employment exist? It's more logical for workers to hold onto their existing jobs until they find new ones. Often, however, workers must move for unrelated reasons before they can start searching for new jobs. They might have gotten married or have to care for elderly relatives. Other times, they might have saved enough money so they can quit unfulfilling jobs, and 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, because they know it will be more difficult to find better ones. However, cyclical unemployment more than offsets the decline in frictional unemployment, as businesses lay off employees whether they like their jobs or not. Effects of Frictional Unemployment:
Frictional unemployment is not as harmful to an economy as the other types of unemployment, such as cyclical and structural unemployment. That's because a rise in frictional unemployment is simply an increase of workers moving toward better positions. Even if workers leave due to firings or company-specific layoffs, it means they were out of sync with their positions or managers, or that they are leaving uncompetitive companies or industries. In any case, they will win positions that are better for them as a result. Frictional unemployment is...
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