What type of unemployment arises when individuals are temporarily out of work while transitioning to new jobs?

Frictional unemployment refers to the temporary period when individuals are between jobs or are in the process of looking for new employment. This type of unemployment occurs naturally in a healthy economy as workers take time to find a position that better matches their skills, interests, or personal circumstances. It can also arise from recent graduates entering the job market for the first time.

This concept highlights the dynamic nature of labor markets, where individuals might be voluntarily unemployed for a short period while they seek better opportunities or match their skills with available jobs. The underlying assumption is that this form of unemployment is a normal aspect of the job search process, reflecting individual choice and the time it takes for workers to find suitable employment.

The other types of unemployment, such as structural and cyclical, involve different underlying issues—structural unemployment relates to broader shifts in the economy or industry that render certain skills obsolete, while cyclical unemployment is linked to economic downturns and reduced demand for labor.