Frictional unemployment is the short-term unemployment of people who are changing jobs, careers, or locations. This category of unemployment includes the jobless who have the skills and competencies to land a job, and are in the process of finding a job, but have not landed a job yet. Workers who look out for a new job when still retaining their old jobs do not count under frictional unemployment.
This type of unemployment exists because of the mismatch between the characteristics of supply and demand in the job market. The characteristics of mismatch include skills, payment, work timing, location, attitudes, tastes, and other factors. In this sense frictional unemployment closely resembles structural unemployment where a surplus of a particular skill set or type of employee arises, with not all such individuals able to find work, such as what happened when many highly skilled technology professionals remained unemployed after the tech bubble of the 1990s.
People who hold on for the right or ideal jobs prolong frictional unemployment in the short term, but since they remain less likely to change such a dream job, reduce frictional unemployment in the long run. Frictional unemployment, however, can never be eliminated, for even in the best of market economies, some people will always be between jobs.
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