frictional unemployment
Employment Law

What Is Frictional Unemployment?

| June 22, 2023

Frictional unemployment is a kind of temporary unemployed that is caused when you quit a job without having an offer of employment from an organization. 

This kind of unemployment is very much common in our society as there are various reasons you might leave a job voluntarily. 

In this article, we will discuss what is frictional unemployment along with its causes. 

What Is Frictional Unemployment?

Frictional unemployment occurs due to voluntary resignation, leading to employment transitions within an economy. As employees tend to move from one job to another and new employees enter the workforce, a temporary unemployment period is created. Frictional unemployment is apparent within a stable and growing economy. And is considered a natural kind of unemployment in economic terms. This is because the minimum unemployment rate within an economy is due to economic forces along with labor movement. The rate of frictional unemployment is calculated by dividing the employees actively looking for new jobs by the total labor force. The workers who are actively looking for a job are further divided into three classifications. 

These include: 

  1. Employees who have left their employment. 
  2. Employees who are returning to the workforce. 
  3. New entrants to the workforce. 

Causes Of Frictional Unemployment

Unemployed

There are a variety of reasons behind the cause of frictional employment. We have already noticed that frictional employment occurs within a growing and stable economy. 

The causes of frictional employment are as follows: 

New Entrants In The Workforce

Recent graduates and first-time job seekers are noted to have a lack of skills and resources for finding suitable employment opportunities. 

Due to this, they do not even get employed by companies offering them a job as they aim to acquire better job opportunities. This leads to the occurrence of a temporary transition in the economy. 

Moving to another region to get a job also causes frictional unemployment. This is because there is a gap between an employee leaving a job and a new employee being used as a replacement. 

Exploring For Greater Meaning 

Employees might leave their job in search of better pay, which adds to frictional unemployment. 

In some cases, employees might also quit their jobs for the aim of returning to school to acquire a new skill. As it might lead them to earn more income. 

In other cases, employees might quit their job for personal reasons like sickness, pregnancy, or retirement. 

When such employees are seeking to return back to the workforce, they are considered within the faction of frictional unemployment. 

Searching For Better Jobs

Searching For Better Jobs

There are many people who have the idea that the economy is robust and allows them to stay unemployed for a short period of time. 

Due to this, such individuals tend to quit their jobs without being offered with another job opportunity from another employer. 

Recently, this phenomenon has been started to have been tracked by the phenomenon known as ‘quit rate.’ 

Employees are known to quit their jobs without acquiring another job when they have saved enough monetary resources to sustain their temporary unemployment. 

Benefits Provided For Unemployment

The benefits provided by the government for the unemployed masses are another cause of frictional unemployment. 

Many workers might stay unemployed for the ability to acquire better opportunities in the job market. Moreover, income also makes workers selective of their next employment. 

Additionally, frictional unemployment is also caused when organizations abstain from recruiting new employees. This is because they might not have the skills that suit the employer’s requirements. 

Do you know?

Frictional unemployment could be a positive sign that workers are willfully seeking better opportunities within the workforce. This provides businesses with a large amount of talent from the job pool that they can use to improve their operations. 

Structural Vs. Frictional Unemployment: Differences

Structured and frictional unemployment are two types of employment that occur within an economy. 

The main difference between frictional and structural unemployment is their cause. Frictional unemployment is not caused by any factor that is associated with the economy. 

However, structural unemployment is caused due to structural shifts within the economy. This leads to the workforce having a hard time acquiring employment opportunities. 

Additionally, frictional unemployment results from an employee transitioning from their old employment to a new one. Due to this, it is termed as a natural type of unemployment. 

This is because it does not relate to any factors that are associated with an underperforming economy. 

On the other hand, structural employment is long-term unemployment that is caused by changes in the economy. 

This usually occurs when there is a surplus of jobs and workers seeking to work in such jobs. But does not have the required skillsets for being hired by employers. 

One of the major causes of frictional unemployment is workers seeking better pay or opportunities within the job market. This is a positive mark for an economy as it means it is growing. 

On the other hand, structural employment occurs due to technological advances within the workforce that directly affects the economy. This is becoming technological advancement that can make skilled employees obsolete due to a lack of new skills. 

Structural unemployment, unlike frictional unemployment, can be caused due to decline in a certain industry. For instance, in the future, there might be complete depletion of fossil fuels. 

This can lead to the closure of fossil fuel organizations, which can lead to their employees facing structural unemployment due to a lack of jobs in a similar industry. 

Final Thoughts

Now you have a better understanding of the concept of frictional unemployment. 

If you have quit your job and in the lookout for a new job or are in the transitioning period of shifting to your new job, then you are classified in frictional unemployment. 

You might be in frictional unemployment because you are looking for better opportunities or you are just entering the workforce for the first time.

Read More:

Spread the love

Jyoti Jha
Jyoti Jha

Jyoti Jha is a freelance SEO content writer for tech , health, and education-related content. With 5 years of experience in the industry, I am creating high-quality content that captivates readers and delivers value.

COMMENTS (0)

Leave a Reply

Your email address will not be published. Required fields are marked *