Full employment is the state in which all available sources of labor are being utilized in the most effectual economical manner. It exemplifies the highest amount of unskilled and skilled labor which could be utilized in an economy at a particular time. In this case the remaining joblessness is frictional. Fictional unemployment is the percentage of unemployment which results from employees who are in between jobs though they are still in the labor force. Fictional unemployment makes it impossible for an economy to register 0% unemployment even in full employment and thus, even in full employment is there is a small percentage of unemployment. According to McEachern (2012), in full employment there is a very low employment which range betwee4 to 6%.
Effect of Generous Unemployment Benefit on Full Employment
Generous unemployment insurance ensures that those that are not employed would benefit from the government. It serves as a governmental responsibility to sustain those who are not absorbed in the country’s labor system. Normally, unemployment insurance is provided for individuals who meet certain qualification for a certain period of time and they are condition to remain active in search for a job. This includes those who have lost their jobs. However, it does not cover those reentering the labor force or those entering for the first time. In addition those who are fired for just reasons are also not covered. Based on the fact that the benefit has a time limit, and does not benefit those in fictional unemployment, increase in generous unemployment compensation may not affect the rate of full employment. However where those reentering the labor market are compensated, this compensation can highly influence the attainment of full employment (McEachern, 2012).
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