full employment


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Full Employment

A situation in which there is no cyclical unemployment. Full employment does not mean there is no unemployment, since there may be frictional unemployment as persons move from old positions into new ones. Some economists hold that full employment occurs when unemployment falls to the rate below which inflation accelerates, though other economists dispute this idea. See also: NAIRU.

full employment

see ECONOMIC POLICY.

full employment

the full utilization of all available labour (and capital) resources so that the economy is able to produce at the limits of its POTENTIAL GROSS NATIONAL PRODUCT. Full employment is one of the main objectives of MACROECONOMIC POLICY. In practice, of course, 100% employment cannot be achieved. Inevitably there will always be some unemployment present because of labour turnover and people spending time searching for and selecting new jobs, and because of structural changes in the economy - job losses in declining trades that require people to transfer to new jobs created in expanding sectors. Accordingly, a more realistic interpretation of full employment suggests itself: full employment is achieved when the number of registered unemployed (see UNEMPLOYMENT RATE) is equal to the number of job vacancies (see VACANCY RATE). Even these measures, however, do not give an accurate estimate because many groups, like housewives and older workers, may fail to register as unemployed when job prospects are bleak even though they wish to work (DISGUISED UNEMPLOYMENT).

For macroeconomic purposes, however, most governments tend to specify their full employment objectives in terms of some ‘targeted’ level of unemployment (e.g. 5% of the total labour force), although the exact target level is rarely publicly disclosed. See UNEMPLOYMENT, FIXED TARGETS ( APPROACH TO MACROECONOMIC POLICY), SUPPLY-SIDE ECONOMICS.

References in periodicals archive ?
Coretta Scott King's actions were pivotal in developing what would become the 1978 Full Employment and Balanced Growth Act, better known as the Humphrey-Hawkins Act, after its Senate sponsor (Minnesota's Hubert Humphrey) and its sponsor in the House (California's Augustus Hawkins).
Another, more recent view of full employment links employment to inflation.
This growth rate is known as the knife edge since any change in investment above or below this rate pulls income off the full employment growth path forever.
Full employment should inaugurate a period of public rejoicing, but as America turns the tide on unemployment this time, a period of national self-examination might be more appropriate.
monetary policy remains "quite accommodative," while economic conditions are now consistent with full employment and the Fed's inflation target.
That brings us to another important question, namely whether full employment is possible and desirable.
If full employment is unachievable, full employment should not be our goal.
Labour leader Ed Miliband said: "David Cameron's empty promises of full employment will mean nothing to so many people struggling with empty wallets as a result of the low-wage economy.
Today the definition of full employment is 7 per cent - nearly six times what we meant in the Fifties.
And TUC chief Frances O'Grady said Osborne needed to focus on the living standards crisis, adding: "Benefit cuts are not the route to full employment.
She explores four central elements of the bill: the Federal government's responsibility to ensure full employment when the private sector couldn't, the apparatus for doing this, national economic planning, and the strength of the government's commitment.