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Will It Get Any Better Soon?- Unemployment Rates

In: Business and Management

Submitted By alcoop86
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Will It Get Any Better Soon?
: Unemployment Rates

Ariel Cooper
Business Economics GM545
Summer 2011 alcoop86@gmail.com Chapter 16, Question 5 In the US economy there is always some level of unemployment present. There are people losing jobs, leaving jobs, taking temporary hiatus from employment, on a daily basis. For the purpose of this exercise will be taking an in depth look at what a specific type of unemployment entails. This unemployment type is called Frictional unemployment. Let’s begin by defining what frictional unemployment is; frictional unemployment refers to the “natural” unemployment of our economy. This is described as the transitional period in which people move from one employment position to another, sometimes experiencing up to a few weeks in between positions. (Stone, Core Economics, p. 443) During this period of time these people are frictionally unemployed, they may already have a new position waiting on them to start, or they may be holding out in search of a better employment opportunity. Frictional unemployment can also refer to when a business decides to promote a hiring freeze and does not bring in new talent due to the assumption that there are not enough qualified candidates, when in fact there are. We will now discuss why frictional unemployment is important to have in any economy. Frictional unemployment is important to have in the economy because there is a constant reallocation of resources from one productivity level to another. (AmosWEB Encyclonomic) Meaning that as long as frictional unemployment is occurring there will always be companies that will need resources to search for and locate new talent, and there will always be people in search of jobs that will meet their qualified skill sets. Also with frictional unemployment occurring, those who may want to look for a better job will be given that opportunity because

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