Why Is Frictional Unemployment Important to Have in Any Economy

In: Business and Management

Ime Ekwere
Business Economic
Business Economics GM545
Fall 2011


Why is frictional unemployment important to have in any economy?

Frictional unemployment is considered as a sign of an economy well being for unemployment that exits in a fast-growing economy with an expanding mobile, flexible and adaptable labor force of having choices. This type of unemployment is beneficial to workers because it allows them to seek for jobs they want the most or jobs those best suits them. It also benefits companies, because it allows them to choose from among the best talent. The absence of frictional unemployment entails people to remain in the same jobs for life, creating a stagnant system that suppresses innovation and rusticates skills.
Frictional unemployment is important in the economy because it matches the demand for worker with supply and brings equilibrium into the labor market. Frictional employment arises from those candidates that are just leaving from colleges and those who are unemployed because they are changing jobs. Frictional unemployment is present because there is imperfect information in the labor market and workers have to search for employment suitable for them.


Structure unemployment: this is a type of unemployment that arises from an absence of demand of workers that are available. Reasons for the absences of demand for workers are due to the change in technology, where machines are use to replaced workers leaving them all unemployed. Also the changes in the economy and capital replacement can cause the absence in demand for workers.
According to our text book, structure unemployment is defined as the changes in the structure of consumer demand s or technology. It is associated with the extended periods of unemployment. An example of structure unemployment is the declinging...

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