Friction (economy)

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Friction , also called market friction , generally describes the occurrence of coordination or transaction barriers in economics .

In labor market theory, for example, frictions describe resistance or obstacles that exist in the labor market and prevent vacancies from being filled with unemployed people. Reasons for friction here are, for example, a change of job and associated relocations or the temporary separation of families.

Frictional unemployment (search unemployment) arises from the constant change of job. It is always available at short notice and to a small extent. A certain degree of frictional unemployment is inevitable (see also “ Beveridge curve ”).

The occurrence of frictions due to transaction costs and information asymmetries is taken into account in the New Institutional Economics , but not in the Neoclassical .

Web links

  • Economic Sciences Prize Committee of the Royal Swedish Academy of Sciences: Market with search frictions. - Declaration on the Prize of Economics in Memory of Alfred Nobel 2010 (PDF; 982 KiB)