Thinking about friction, most people picture 2 surfaces rubbing together. As economists, we should instead think of the Nobel Prize.
Friction is one reason that Dale Mortensen won the 2010 Nobel Prize in Economics.
Discussing unemployment, Dr. Mortensen says that “friction” is one source of 9.8% joblessness. Hunting for a job, people experience friction when they complete paperwork, make phone calls, and wait on lines. Creating delays and frustration, friction is even more cumbersome when a worker tries to switch industries if the worker and the job have to find each other.
The Economic Lesson
Referring to unemployment in The New Yorker, James Surowiecki discusses the debate over whether unemployment is cyclical or structural. Is it because of the business cycle which means people are losing jobs because of diminishing production. Or, does high unemployment reflect a fundamental shift in the economy which has led to a mismatch between jobs and workers? You can see that both cyclical and structural unemployment involve friction.