Frictional Unemployment

Frictional Unemployment – Frictional unemployment refers to the temporary unemployment that occurs when workers voluntarily leave their jobs to seek better opportunities, or when new entrants join the labor force for the first time. It is a natural and short-term phenomenon in a dynamic economy. Key Features: Short-term and voluntary, often due to career changes, relocations, or job searching. Reflects mobility in the labor market and a healthy economy. Occurs even when there are sufficient job opportunities in the market.

Example: A software engineer resigns from a company to search for a higher-paying role at another firm. The period between leaving the old job and starting the new one constitutes frictional unemployment.