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.

Full Employment

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.