Prospecting for gold. Searching for a job. It explains almost everything else. It assumes that employer and worker characteristics are perfectly known to all. You trade-off between the lost wages of searching, and the potentially higher wage you will earn if you find a good match.
Employers make the same trade-off.
H. Insofar as unemployed workers are engaged in useful search activities for unknown opportunities, it makes sense to view them as voluntarily unemployed. It is a much bigger puzzle if workers' best match is obvious, but unemployment persists. With flexible wages, this wouldn't happen - unemployed workers would bid wages down. The Natural Rate of Unemployment A. Unemployment will always exist because people have to spend time searching for suitable jobs. At any given time, some people are finding jobs, others are leaving them.