| If there is an inefficient excess of frictional unemployment, it should be reduced by policies that change search behavior and improve the effectiveness of job markets. |
| For example, people register for unemployment payments when they are between jobs, known as frictional unemployment, and others cannot find jobs because they lack the required skills, what is termed structural unemployment. |
| In the short term, the reallocation of workers between the various sectors may take some time, increasing frictional unemployment. |
| Certainly, reallocation of labour could not occur with no frictional unemployment. |
| Unlike frictional unemployment, long-term unemployment carries with it the loss of human capital and morale, ultimately threatening the employability of the person. |
| This paper falls within the scope of recent efforts to integrate frictional unemployment into New Keynesian models: firms actively look for workers matching their requirements within the pool of job-seekers. |
