Question

Explain frictional unemployment with example.

Answer 1

Frictional unemployment:

• The unemployment that results from time spent between jobs when a worker is searching for a job or transitioning from one job to another is called frictional unemployment.
• The term ‘frictional’ is used to describe the fact that labour markets do not immediately match up the job demand with job supply and hence a friction is created between the two.
• Frictional unemployment is of short term in nature.
• When in production process, because of change in demand or production or due to change in taste and preference or arrival of new technology, new goods enter in the market and unemployment arises, then this unemployment is called frictional unemployment.
• In developed countries when old production system is replaced by new . production system then the units with old production system face economic loss and shut down. As a result the labourers working in those units remain unemployed till they do not learn the work according to the new technology.
• For example, when smart phone replaced old mobiles phones, then the laboures engaged in production, sales and service of mobile phones became unemployed temporarily.