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(The Meaning of Full Employment) When the economy is at full employment, is the unemployment rate at zero percent? Why or why not? How would...

      

(The Meaning of Full Employment) When the economy is at full employment, is the unemployment rate at zero percent? Why or why not? How would a more generous unemployment insurance system affect the full employment figure?

  

Answers


chris

Full employment can be classified on two bases namely:
The extent to which the avoidance of unemployment is given priority over the competing objects of economic policy.
The technical basis of the definition on the kind of statistical series it employs and how it employs them (Rees, 1957). Further, Baker and Bernstein (2014) argue that for economists, the definition of full employment invokes the tradeoff between unemployment and inflation.
When the economy is at full employment, the unemployment rate is not zero percent. Full employment is an economic situation where all the available labor resources are utilized in the most efficient way. The remaining rate of unemployment can be frictional or structural or voluntary.
A more generous unemployment insurance system would drive unemployment rate higher. This is because unemployed citizens would not consider seeking jobs because they will get benefits that come with unemployment.
chris10 answered the question on March 25, 2018 at 18:13


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