FULL EMPLOYMENT

Definition: Full employment refers to a situation in which all those people who are willing and able to work at the existing wage rate get work without any due difficulty. Ordinarily, the term full employment refers to the situation in which no one is employed.

Under full employment, there can be two types of unemployment:

Frictional unemployment: Sometimes people leave one job in search for some other job and remain vacant between these periods; this is termed as frictional unemployment.

Structural unemployment: Where people remain unemployed due to a mismatch between unemployed person and demand for a specific type of workers. For example, due to the introduction of new technology, the old staff become unemployed as now they do not possess enough exercise to do a particular job.