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AS Macro Key Term: Frictional Unemployment
11th April 2011
Frictional unemployment is transitional unemployment due to people moving between jobs: For example, redundant workers or people joining the labour market for the first time such as university graduates may take time searching to find the work they want at wage rates they are prepared to accept.
Imperfect information in the labour market may make frictional unemployment worse if the jobless are unaware of the available jobs. Incentives problems can also cause some frictional unemployment as some people looking for a new job may stay out of work if they believe the tax and benefit system will reduce the net increase in income from taking work. When this happens there are disincentives for the unemployed to accept work – this is known as the unemployment trap.
In short, frictional unemployment happens when it takes time for the labour market to match the available jobs with those people seeking work. Our charts below track what has been happening to the scale of unfilled job vacancies in the UK labour market over recent years.
Job vacancies
Data from Timetric.
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Labour Market, UK from Timetric
Job vacancies in manufacturing and construction industries
Data from Timetric.
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Labour Market, UK from Timetric
Unemployed people per vacancy in the UK
Data from Timetric.
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Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.