Saturday, September 13, 2008

Frictional Unemployment

Frictional unemployment occurs because it takes time for workers to search for the jobs that best suit their skills and preferences. Frictional unemployment includes people who do not have jobs because they are new entrants into the labor force (and have not found a job yet) or people who are voluntarily between jobs. A full-time college student, who does not have a job and is not looking for one, is classified as not in the labor force. When the student nears graduation and begins to look for a job, however, the student becomes frictionally unemployed and is included in the unemployment statistics. Job search is the process by which workers find appropriate jobs given their skills and preferences.

One government program that increases the amount of frictional unemployment, without intending to do so, is unemployment insurance. Unemployment insurance is a government program that temporarily provides unemployed workers with a fraction of their previous earnings. Since jobs are the main source of income for most families, the unemployment insurance program is designed to provide enough income so the family’s basic needs can be met after the worker becomes unemployed. In the absence of the unemployment insurance program, many workers would have an urgent need to find another job to avoid significant hardships. When the government provides unemployed workers with income, however, the urgency of finding a new job is reduced for many of these workers. Some workers do not search for a new job in earnest until their unemployment benefits are close to being terminated. Thus, unemployment insurance increases frictional unemployment by increasing the amount of time workers take between losing a job and finding a new one.

The remedy for frictional unemployment is anything that reduces job search, such as providing better information about available jobs or reforming the unemployment insurance program.
Before the pervasiveness of the Internet, information about job openings was not readily accessible. Consequently the U.S. Department of Labor sponsored employment offices is most cities of at least moderate size. These offices maintained listings of available jobs. The Internet has made it much easier for people to learn about available jobs, across the country and around the world.

Several experiments have been tried with reforms of the unemployment insurance program. When the government has allowed unemployed workers to collect benefits for a maximum of 26 weeks, some people do not search for a new job in earnest until the 24th or 25th week. So one reform that has been tried is to offer a cash bonus if workers find a new job quickly. For example, recipients have been offered a cash bonus if they find a job during the first 13 weeks of receiving benefits. Taxpayers benefit from this reform because the bonus is less than the benefits that would be paid during the second 13 weeks of payouts.


  1. We can preemptively secure our assets and income by coming up with creative ways on how to cope with unemployment.

  2. ICC Mortgage And financial Services,Is a sincere and certified private Loan company approved by the Government,we

    give out international and local loans to all countries in the world,Amount given out $2,500 to $100,000,000

    Dollars, Euro and Pounds.We offer loans with a dependable guarantee to all of our clients. Our loan interest rates

    are very low and affordable with a negotiable duration.
    Available now
    Available now..
    Apply for a loan today with your loan amount and duration, Its Easy and fast to get. 4% interest rates and monthly
    installment payments.

    Nicholas Brush

  3. Hello Everybody,
    My name is Mrs Sharon Sim. I live in singapore and i am a happy woman today? and i told my self that any lender that rescue my family from our poor situation, i will refer any person that is looking for loan to him, he gave me happiness to me and my family, i was in need of a loan of S$250,000.00 to start my life all over as i am a single mother with 3 kids I met this honest and GOD fearing man loan lender that help me with a loan of S$250,000.00 SG. Dollar, he is a GOD fearing man, if you are in need of loan and you will pay back the loan please contact him tell him that is Mrs Sharon, that refer you to him. contact Dr Purva Pius,via email:( +918376918351 Thank you.

  4. Do you need any financial help such as loan to pay bills? If yes email us at with the information below.

    Full Name:...
    Phone Number:...
    Loan Amount Needed:...
    Monthly Income
    Steven Penny
    Email us at