Frictional unemployment is the result of a voluntary search for a new job by employees, which is usually of a temporary nature. Often laborers quit their jobs and look for a more suitable workplace. During the search period, they are formally unemployed and constitute a phenomenon of frictional unemployment, which is inherent even in a stable emerging economy.
This type of unemployment is part of natural unemployment, which is normal and is not caused by reasons related to economic decline. The frictional unemployed are, for instance, a student who has left university and is looking for a job, and a person who quit his job because he moved to a new place of residence. Most of the cases of friction unemployment are related to temporary transitions.
In contrast, structural unemployment is the result of other causes. It tends to be longer-term and is conditioned by specific changes in the economy. For example, it may be connected with excessively reduced demand for a particular profession, while the labor market is still large. Also, the products of technological progress replace whole circuits of the production process, eliminating the demand of employers for certain employees.
Structural unemployment is a predominantly negative phenomenon requiring effective economic action. According to the Congressional Research Service data, the unemployment rate in the U.S. increased dramatically as a result of the 2008 financial crisis and has since declined. In this case, it is mostly structural unemployment, as it is not voluntary.
At the same time, frictional unemployment is indicative of the natural employment search processes and is not a negative economic factor. Moreover, a certain level of frictional unemployment is evidence of the dynamic nature of the labor market and healthy economic development. This type of unemployment is a natural phenomenon of a free market economy and does not require government intervention.