Overfull Employment

Overfull Employment

A situation in which the demand for labor exceeds supply. This results in wage and salary increases as employers try to attract employees. This, in turn, leads to employees spending more of their higher wages, which results in higher prices. According to some economists, overfull employment leads to inflation.
References in periodicals archive ?
Breaking this nexus, Ropke states, requires tough monetary policies from central banks "until the chain reaction of overfull employment and trade-union power, wage increases, price increases, and more wage increases is broken." (57) In some circumstances, governments may try running large budget surpluses to produce the same results, thereby sparing central banks from having to implement truly radical measures.
(6) Thus any major gains in Y/L would have to come from decreases in L, decreases that, in the new market environment, were in part dictated by the overfull employment policies of the pre-transition period.
The lack of a good theory relating employment to prices, the big weakness in the Keynesian political economy, meant that governments in 1960s-70s relied on incomes policy to achieve their overfull employment targets.