Sectoral shifts, frictional unemployment, and job searches Suppose the world price of steel falls substantially. The demand for labor among steel-producing firms in Pennsylvania will ___. The demand for labor among automobile-producing firms in Michigan, for which steel is an input, will _. The temporary unemployment resulting from such sectoral shifts in the economy is best described as ___ unemployment.
Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal?
a. Taxing the price of placing a resume or posting a job opening on a job-search website
b. Improving a widely used job-search website so that it matches workers to job vacancies more effectively
c. Increasing the benefits offered to unemployed workers through the government's unemployment insurance program

If the price of steel falls, the number of steel producing firms would reduce. As a result, the demand for labor among steel-producing firms would fall.

Steel is now cheaper, so the demand of steel by automobile companies would rise and the production of car would rise. More labour would be needed to make more cars and as a result demand for Labour in the car industry would rise.

Frictional unemployment occurs when Labour leaves his current and unemployment and searches for a new one. The period between when Labour is unemployed and searching for a new job is known as frictional unemployment.

Improving a widely used job-search website so that it matches workers to job vacancies more effectively would reduce the search period and reduce frictional unemployment.

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