Full
employment refers to a situation when all those who are able to work and are
willing to work (at the existing wage rate) are getting work. It is a situation
when, corresponding to a given wage rate, demand for labor force is equal to
supply of labor force, and the labor market is cleared (it is in a state of
equilibrium).
Two situations must be noted in this definition:
1)
Full employment does not mean that everyone is employed. People who are voluntarily unemployed, such as ‘idle rich’, are not
employed because they are not willing to work. They are not treated as
unemployed.
2)
There might be some amount of frictional unemployment
owing to technological improvements, decrease in demand for the product of some
industries, or because some person may be changing jobs or because of
structural changes in the economy. It may take some time for these persons to
get a new job. So, these people may remain temporarily unemployed.
