Monday 713

 Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 9 The Real Economy in the Long Run
Chapter 28 of 36 Unemployment
Section 9 of 21
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Here we discuss four explanations for long-run unemployment
-1- frictional unemployment
-2- minimum wage laws
-3 - unions and collective bargaining
-4- efficiency wages
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-1- Frictional Unemployment
This is unemployment that results because it takes time for workers to search for and obtain jobs.
Job search is the process of matching workers and appropriate jobs and is a reason there is always some unemployment.
In the job market
· workers have different tastes and skills
· jobs have different attributes
· information about job candidates and job opportunities is disseminated slowly
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Frictional unemployment often results from changes in demand for labor among firms.
When consumers decide they prefer Apple to Dell computers Dell lays off workers and Apple hires workers.
Former Dell workers must search for new jobs.
Apple must interview and decide which new workers to hire.
A period of unemployment results from this transition.
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Because different country regions produce different goods employment can rise in one region while it falls in another.
Texas oil-producing firms respond to a falling price of oil by decreasing production and employment.
Simultaneously, cheaper gasoline causes increased car sales.
Michigan auto-producing firms raise production and employment.
Changes in composition of demand among industries or regions are called sectoral shifts.
Because it takes time for workers’ job search among industry and geographic sectors, sectoral shifts cause temporary unemployment.
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Because the economy is always changing frictional unemployment is inevitable.
The four industries with the largest employment in the United States a century ago were cotton goods, woolen goods, clothing, and lumber.
Today, they are autos, aircraft, communications, and electrical components.
Because of this transition jobs were destroyed in declining industries and created in arising ones.
Higher productivity and living standards were results.
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Data show at least 10% of U.S. manufacturing jobs are destroyed every year, mostly due to technological advance, not imports.
More than 3% of workers voluntarily leave jobs in a typical month, often because they realize their jobs are not a good match for their tastes and skills.
Many of these workers find new jobs at higher wages.
This movement from job to job is normal in a well-functioning and dynamic market economy, but it results in some frictional unemployment.
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workers find jobs with higher wages
rōdō-sha wa yori takai chingin de shigoto o mitsukeru
労働者はより高い賃金で仕事を見つける
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In the U.S. what is the current national unemployment rate and how much of that is frictional unemployment? ChatGPT:
As of June 2026, the official U.S. unemployment rate is 4.2%, representing approximately 7.1 million unemployed people.
The government does not publish a precise frictional-unemployment rate, because individual unemployment cases cannot always be cleanly separated into frictional, structural, and cyclical categories.
However, a reasonable broad estimate counts people who voluntarily left jobs, returned to the labor force, or entered it for the first time:
Job leavers: 0.5% of the labor force
Reentrants: 1.3%
New entrants: 0.5%
Together, these equal approximately 2.3 percentage points, or 3.8 million people—roughly 54% of all unemployment.
This is only an estimate:
-some entrants may have structural employment problems
-some people classified as job losers may be passing briefly between jobs
The Federal Reserve describes frictional unemployment as involving people temporarily between jobs or searching after reentering the labor force.
Best concise answer: the unemployment rate is 4.2%, of which roughly 2.3 percentage points may be considered frictional.