We have already studied that

At Equilibrium Point

There is full Employment

It means all factors of production are fully employed

What is Meaning of Full Employment?

It refers to a situation

where people who are willing to do work

and capable to do work

at existing wage rate

get work without any difficulty


At full employment level, all labor resources are utilized at most efficient way

Here, no workers are involuntarily unemployed


Can there be unemployment even in case of Full Employment?


Under Full employment, there can be 2 types of unemployment

Frictional Unemployment

Structural Unemployment


What is Frictional Unemployment?

It refers to a temporary situation

where one person leave one job

and join some other job

This unemployment arises because of

Lack of labour market information to workers (No knowledge fo new job opportunities)

Lack of mobility of workers (Workers may not be ready to move to different place for work)


What is Structural Employment?

It refers to situation where workers skill become obsolete due to change in technology

there is a mismatch between kill of worker and skill required for job

It happens due to changes in technology Example - Computerization


What is Involuntary and Voluntary unemployment?

Involuntary Unemployment refers to a situation where

all people who are willing to do work and able to do work do not get any work


Voluntary unemployment refers to situation

when person is not willing to work at existing wage rate


Which type of unemployment is counted while calculating size of unemployment?

We take only Voluntary unemployment


NCERT Questions

No questions in this part

Other Books

Question 1

Give meanings of:

  1. Involuntary unemployment
  2. Full employment
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CA Maninder Singh is a Chartered Accountant for the past 13 years and a teacher from the past 17 years. He teaches Science, Economics, Accounting and English at Teachoo