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


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 ?
While the Reagan Revolution saw us top our total employment record only one year after we lost net jobs, the movement of the unemployment rate is arguably worse (or at least no better than) under Reagan compared to Obama's tenure despite the fact it's been six years since our last total employment high and, given present trends, it might take until 2015/2016 to surpass that old high.
Small enterprises (10-49 persons employed) accounted for 21% of total employment and 19% of value added in the NFBE in the EU.
Still, the growth in total employment indicates that the labor market is continuing to improve, the government said in a statement.
The three-year plan also calls for a reduction of 2,300 employees, bringing total employment to 21,500.
Jobs have been created in the local economy with total employment in 2002 about 1.
Thompson examined total employment - a broader category than wage-and-salary jobs.
By 2000, manufacturing employment made up only 16 percent of total employment.
As a result, total employment may rise by only 1%, and the unemployment rate may average 5.
4 percent of the state's total employment base--and was indirectly responsible for the employment of 509,200 people in related industries.
Over the five-year period, total employment in the manufacturing sector declined by about 6%.
They showed that the wage discrimination doesn't change total employment of a monopsony if the supply curves of labor in two separate markets are linear, and that Pigou-Robinson's proposition applies to the input markets.
Twenty-two percent of responding companies planned to increase total employment in the second quarter, while 6% expected cutbacks.

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