The purpose of this assessment is to understand the concept of full employment a
ID: 1191784 • Letter: T
Question
The purpose of this assessment is to understand the concept of full employment and analyze how frictional unemployment affects it. Assessment Description: Based on your understanding of full employment, answer the following questions: What does full employment mean to you? Does full employment mean everyone who is looking for the job gets one? Is it possible for an economy to achieve full employment? Provide appropriate rationale to support your response. Is full employment related to natural rate of employment? Provide appropriate rationale to support your response. How does frictional unemployment always come in the way of full unemployment?
Explanation / Answer
Full employment implies all those who are actively looking for job are able to find employment of their choice.
It is not possible to actually and numerically achieve full employment, as we are living in a constantly changing world, with uncertainties and inefficiencies. It is practically impossible to create job for every single person.
However, a better approach is the ‘ideal unemployment’, where in unemployment is achieved at an ideal rate, where the types of labor market inefficiencies are minimized.
Natural unemployment is the lowest rate of unemployment that an economy can maintain in the long run. It is related to full employment, in the sense that full employment adjusted for market inefficiencies gives natural unemployment, like frictional unemployment.
Frictional unemployment is the unemployment which occurs when a worker is searching for or shifting from one job to another. It is also known as search unemployment, and is a mark of market inefficiency.
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