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Chapter 8: Q 26 (page 214)

What is frictional unemployment? Give examples of frictional unemployment.

Short Answer

Expert verified

it is type of unemployment that occurs as when workers move between jobs and are unemployed for the time.

Step by step solution

01

Step 1. Introduction

Natural rate of employment is the unemployment rate when the economy is stable and growing strongly without any booming or recession.

02

Step 2. Frictional Unemployment

In market economy there are both type of companies doing bad [firing and laying offs] and good[ looking for more workers to hire] for various reasons. Process of leaving one job and finding or joining new job takes time.

As workers move between jobs, the unemployment created as a result is referred to as frictional unemployment.

03

Step 3. Examples

  • Students: When students complete education, they remain unemployed for a period in search of job.
  • Maternity: Many parents choose to leave their job for a short period of time yo raise their children. They remain unemployed during this period.
  • Career break: Workers may take a break from employment tospend some time doing activities like travelling, or pursuing a hobby.

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