- Concept: Frictional unemployment arises due to people moving between jobs, careers, or locations.
- It also occurs when people enter and exit the labor force.
- It is a result of workers and employers having inconsistent or incomplete information.
- It is also called transitional unemployment.
- Impact on Labour Market:
- Always present in the economy.
- Does not necessarily indicate a weak economy.
- Can occur even at “full employment”.
- Reflects the natural dynamism of the labor market.
- Workers take time to find new jobs, and employers take time to select.