Voluntary and Involuntary Unemployment

Voluntary Unemployment 

Voluntary Unemployment occurs when some people are not willing to work at all, are not willing to work at the existing wage rate, these persons are voluntarily unemployed, i.e. unemployed by their choice.

They may not work due to laziness or otherwise, they are not interested in any gainful job. They are unemployed not out of compulsion but due to their choice. We may include both the ‘idle rich’ and ‘idle poor’ in this category. 

Similarly, there may be some anti-social people like thieves and pickpockets who may be voluntarily unemployed.

We do not include such cases of voluntarily unemployed persons under unemployment, therefore these persons are not considered unemployed.   

Involuntary Unemployment 

Involuntary Unemployment refers to the situation when some people are not getting work, even when they are willing to work at the existing wage rate.

It is a situation when Aggregate demand (AD) is not enough to induce fuller utilization of the existing production capacity.

Accordingly, planned output is lower than the potential output (less production due to less demand).

There is excess capacity in the economy, and some people are forced to remain unemployed. People fail to get enough jobs, owing to the low level of planned output (due to low less demand). 

Looked from this viewpoint, unemployment is a situation when there are some able-bodied persons who have the ability to work and are willing to work at the prevailing wage rate but are not able to find work which may yield them some regular income.

Problem of unemployment refers to the problem of involuntary unemployment, not the problem of voluntary unemployment.