Which of the following is an example of frictional unemployment?

• A. A recent college graduate is temporarily unemployed while searching for a job that matches their skills.
• B. A construction worker is unemployed because minimum wages are set above the market-clearing level, reducing the quantity of labor demanded.
• C. A retail cashier is laid off because the store installs self-checkout machines that permanently reduce the need for cashiers.
• D. A steelworker loses their job because demand for domestic steel falls during a recession.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the definition of frictional unemployment. Frictional unemployment occurs when workers are temporarily unemployed while transitioning between jobs or entering the labor market for the first time, often due to job search or matching processes.
2. Step 2: Analyze each option to identify if it fits the frictional unemployment definition. Look for cases where unemployment is short-term and due to job search or skill matching rather than structural or cyclical causes.
3. Step 3: Evaluate the first option: 'A recent college graduate is temporarily unemployed while searching for a job that matches their skills.' This fits frictional unemployment because the graduate is in the process of finding a suitable job.
4. Step 4: Review the other options: unemployment caused by minimum wage laws (option 2) is structural unemployment; job loss due to automation (option 3) is structural unemployment; job loss due to a recession (option 4) is cyclical unemployment.
5. Step 5: Conclude that the example of frictional unemployment is the recent college graduate temporarily unemployed while searching for a job that matches their skills.