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Frictional unemployment is a form of unemployment reflecting the gap between someone voluntarily leaving a job and finding another. As such, it is sometimes called search unemployment , though it also includes gaps in employment when transferring from one job to another.
Beveridge curve of vacancy rate and unemployment rate data from the United States Bureau of Labor Statistics. A Beveridge curve, or UV curve, is a graphical representation of the relationship between unemployment and the job vacancy rate, the number of unfilled jobs expressed as a proportion of the labour force.
Unemployment tends to rise during recessions and fall during expansions. From 1948 to 2015, unemployment averaged about 5.8%. There is always some unemployment, with persons changing jobs and new entrants to the labor force searching for jobs. This is referred to as frictional unemployment.
The Dow (INDEX: ^DJI) plunged on Friday after May's dismal jobs report. But depending on a single factor, your situation is probably either much worse, or much better, than the headline numbers show.
The Great Depression was the worst economic crisis in US history. More than 15 million Americans were left jobless and unemployment reached 25%.
Frictional unemployment occurs when a worker is voluntarily between jobs. This is normal and healthy for the economy, as it increases the matches between job openings and seekers. Structural unemployment is caused by structural changes in the economy. This includes technological changes and the movement and relocation of certain industries.
With cyclical unemployment, the number of unemployed workers exceeds the number of job vacancies and so even if all open jobs were filled, some workers would still remain unemployed. Some associate cyclical unemployment with frictional unemployment because the factors that cause the friction are partially caused by cyclical variables.
Search unemployment (also called frictional unemployment) occurs when workers and firms are heterogeneous and there is imperfect information, generally causing a time-consuming search and matching process when filling a job vacancy in a firm, during which the prospective worker will often be unemployed.