FULL EMPLOYMENT

In general term, full employment is a situation in which everybody is employed. It means demand of labour is equal to supply. In macroeconomic, full employment is a situation in which all those persons who are willing to work at the prevailing wage rate get work. But unemployment exists even in case of full employment because of constant change in demand and supply of labour.
Thus, full employment is a situation in which everyone who wants to work is working except for those who are frictionally and structurally unemployed. There are two types of unemployment associated with full employment:

1)      Frictional Unemployment – It is the unemployment associated with the changing of jobs in dynamic economy. In frictional unemployment, people are temporarily unemployed. This can be due to lack of knowledge about employment, lack of electricity, machine breakdown, search of better jobs etc.

2)      Structural Unemployment – It is the unemployment that results from the long term decline of certain industries. This unemployment arises due to lack of capital, lack of land, change in production technology etc.


Voluntary Unemployment – Voluntary unemployment refers to that situation when persons are unwilling to work at the prevailing wage rate.
Involuntary Unemployment – refers to that situation when unemployment arises due to lack of employment even though the persons are willing to work at the prevailing wage rate.



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