Why frictional unemployment is inevitable in the economy? Explain with argument.

Frictional Unemployment is defined as, “unemployment which results from people is moving between jobs and new workers entering the labor force”. In an economic system in which people are free to change their jobs and in which employers may dismiss inefficient or redundant employees, frictional unemployment cannot be eliminated, and may even be desirable. However, it can be reduced to some extent by providing better information about job opportunities and available workers, and by human resources planning so that workers will possess the skills required by the economy. If we consider a frictional unemployment rate of 4% to be inevitable, then we define full employment as the employment of 96% of the labor force.

Seasonal Unemployment is defined as, “unemployment which is caused by economic slowdowns related to seasonal variations”. Examples of this would be agricultural workers, whose activities slow down in the winter. Another example would be people whose jobs are related to winter activities, such as ice skating and skiing, would be employed during the winter months rather than summer months.

Structural Unemployment is defined as, “unemployment that is caused by structural changes in demand patterns”. The introduction of labor-saving machines in various industries has created a special kind of structural unemployment called technological unemployment.

Cyclical Unemployment is defined as, “unemployment that is due to cyclical changes in economic activity”. A large part of government macroeconomic policy is aimed at reducing these fluctuations in economic activity.

Inevitable in the economy:

Frictional unemployment is inevitable because the economy is always changing. Some firms are shrinking while others are expanding. Some regions are experiencing faster growth than other regions. Transitions of workers between firms and between regions are accompanied by temporary unemployment.

The government could help to reduce the amount of frictional unemployment through public policies that provide information about job vacancies in order to match workers and jobs more quickly, and through public training programs that help ease the transition of workers from declining to expanding industries and help disadvantaged groups escape poverty.