Frictional Unemployment
Temporary unemployment that occurs when workers are between jobs or searching for new employment.
What is Frictional Unemployment?
Frictional unemployment refers to the short-term unemployment that naturally arises as workers move between jobs, enter the workforce for the first time, or return after time away. It reflects the time it takes for workers and employers to find each other — even in a healthy, fully employed economy. Frictional unemployment is considered voluntary and inevitable: it results from normal job search processes, geographic moves, and labor market information gaps. Economists view some level of frictional unemployment as healthy because it indicates a dynamic economy where workers are seeking better matches. It is a component of the natural rate of unemployment.
Example
A software engineer who leaves a job at a large company to look for a better opportunity at a startup experiences frictional unemployment during the weeks or months they spend job hunting. Even with strong demand for engineers, the search process takes time — representing frictional rather than cyclical or structural unemployment.