Frictional Unemployment

If you’ve ever wondered why unemployment is never at 0%, it’s because of frictional unemployment.

Frictional unemployment is the unemployment that results when workers are in-between jobs. On a societal scale, there are always some people who are in-between jobs or just entering the workforce.

It also represents how we don’t have complete information in the real world (like many economic models assume). Workers and companies are trying to figure each other out. Who is hiring? At what rate? What rate is a worker’s work worth on the market? Is the economy in a hiring-mood, or not? In the real world, we don’t really know until we test the waters.