What type of unemployment is included in the concept of full employment?

The concept of full employment encompasses the idea that the economy is utilizing all available labor resources efficiently without cyclical unemployment. Within this framework, frictional and structural unemployment are the primary types that are accepted as part of the normal functioning of the labor market.

Frictional unemployment occurs when individuals are in between jobs or are entering the workforce for the first time. It reflects the time it takes for people to find new employment that better matches their skills or preferences, a natural process in any economy. Structural unemployment arises from a mismatch between the skills of the workforce and the needs of employers, often due to technological changes or shifts in the economy. Both of these types of unemployment signify that there are individuals transitioning in the labor market but not that the economy is underperforming.

In contrast, cyclical unemployment, which results from economic downturns and recessions, is not included in the full employment concept because it indicates that the economy is not operating at its potential. Seasonal unemployment is also not part of the full employment definition as it relates to predictable changes in demand for certain jobs based on the time of year, which does not represent a failure of the labor market.

Thus, the inclusion of frictional and structural unemployment in the full employment definition accurately reflects a labor