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In [[economics]], full employment has more than one meaning. The majority of [[economists]] believe the unemployment rate is greater than 0% when there is full employment, correspond to the technical term Non-Accelerating Inflation Rate of Unemployment ([[NAIRU]]). In common-sense terms, the rate of unemployement is difference between those ''actively seeking employment'' and the availability of matching employments. Since neither is the full workforce either fully engaged or actively seeking some employment nor are the requirementos of the employments necessarily matching the workers, what should practically be considered "full employment" is a matter of contention. | In [[economics]], full employment has more than one meaning. The majority of [[economists]] believe the unemployment rate is greater than 0% when there is full employment, correspond to the technical term Non-Accelerating Inflation Rate of Unemployment ([[NAIRU]]). In common-sense terms, the rate of unemployement is difference between those ''actively seeking employment'' and the availability of matching employments. Since neither is the full workforce either fully engaged or actively seeking some employment nor are the requirementos of the employments necessarily matching the workers, what should practically be considered "full employment" is a matter of contention. | ||
= Economic Concepts = | |||
== Historical Development == | == Historical Development == | ||
20th century British economist [[William Beveridge]] stated that an unemployment rate of 3% was full employment. Other economists have provided estimates between 2% & 7%, depending on the country, time period, and the various economists' political biases. | 20th century British economist [[William Beveridge]] stated that an unemployment rate of 3% was full employment. Other economists have provided estimates between 2% & 7%, depending on the country, time period, and the various economists' political biases. | ||
== Specific Technical Viewpoints == | |||
=== Long Range Aggregate Spending === | |||
The concept of full employment has so far been used in conjunction with the long run LRAS curve, where long run potential output is also the full employment level of output. Full employment does not mean that there is 'zero unemployment', but rather that all of the people willing and able to work have jobs at the current wage rate. Full employment is the quantity of labour employed when the labour market is in equilibrium. | |||
=== "Structural" Unemployment === | |||
Some Economists estimate a "range" of possible unemployment rates. For example, in 1999, in the United States, the [[Organisation for Economic Co-operation and Development]] (OECD) gives an estimate of the "full-employment unemployment rate" of 4 to 6.4%. This is the estimated "structural" unemployment rate, (the unemployment when there is full employment), plus & minus, the [[standard error]] of the estimate. (Estimates for other countries are also available from the OECD.) [http://www.oecd.org/dataoecd/44/50/2086120.pdf] | Some Economists estimate a "range" of possible unemployment rates. For example, in 1999, in the United States, the [[Organisation for Economic Co-operation and Development]] (OECD) gives an estimate of the "full-employment unemployment rate" of 4 to 6.4%. This is the estimated "structural" unemployment rate, (the unemployment when there is full employment), plus & minus, the [[standard error]] of the estimate. (Estimates for other countries are also available from the OECD.) [http://www.oecd.org/dataoecd/44/50/2086120.pdf] | ||
