Full employment

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Full employment is a term in economics used to describe a macroeconomic situation in which cyclical unemployment (joblessness due to recession) is nonexistent. Other forms of unemployment, such as structural unemployment (joblessness due to lack of employable skills or abilities), seasonal unemployment, or frictional unemployment (joblessness that occurs as workers move from one firm to another, or as they initially enter the labor force) may still exist, and to some extent may be economically beneficial.

Desirability of Full Employment

While economists generally consider it desirable for an economy to attain a state of full employment, as this ensures that available resources are being utilized nearly as efficiently as possible, full employment carries with it the risk of demand-pull inflation should aggregate demand increase once an economy has reached this point. This is due to the fact that output cannot be increased any further if demand continues to rise after full employment has been attained, and as a result, the price level must increase.

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