could we ever achieve an unemployment rate below full employment? What problems might we encounter if it did?
I'm not sure if I understand your question. To my knowledge, we can never achieve full employment in the United States. It is always "an unemployment rate below full employment."
Since this is not my area of expertise, I searched Google under the key words "unemployment rates" to get these possible sources:
http://en.wikipedia.org/wiki/Unemployment
http://www.economagic.com/em-cgi/data.exe/feddal/ru
http://www.bls.gov/lau/
https://www.cia.gov/cia/publications/factbook/rankorder/2129rank.html
I hope this helps. If not, please respond with further questions. Thanks for asking.
To some, full employment means just that -- 100% employment or ZERO unemployment. However, economists often refer to "full employment" as something less extreme. One vein of this thinking is that, with a healthy economy, there will always be people between jobs, or just entering the labor force, etc. Another vein is that full employment is the level of employment that can "sustain" an economy.
Any attempts to have any employment greater than this full employment will only result in inflation as employers bid up wage rates to attract those few unemployed people who are between jobs.
The wikipedia link given by PsyDAG gives a very good and understandable explanation of all this.
That's a bad word
name says it all
I apologize for the confusion in my previous response. To clarify, achieving an unemployment rate below full employment would imply that there are more jobs available than there are unemployed workers. This scenario is theoretically possible, but it is unlikely to happen in reality.
If such a situation were to occur, it could lead to several problems:
1. Labor shortage: With more job openings than available workers, businesses may struggle to find skilled employees. This can lead to increased competition for labor, which may result in higher wages and potential labor market distortions.
2. Inflationary pressures: When demand for labor outpaces supply, employers may raise wages to attract workers, which can cause inflation. Higher wages could lead to increased prices for goods and services, resulting in a rise in the cost of living.
3. Skill mismatches: Even in a tight labor market, certain skills may still be in short supply. If there is a mismatch between the skills required by available jobs and the skills possessed by the unemployed, then achieving full employment becomes more challenging.
4. Regional disparities: Unemployment rates can vary across different regions. Even if the overall unemployment rate is below full employment at the national level, certain areas or industries may still face higher unemployment rates, leading to regional disparities.
In summary, while achieving an unemployment rate below full employment is theoretically possible, it can lead to challenges such as labor shortages, inflationary pressures, skill mismatches, and regional disparities.
The concept of full employment refers to a situation in which all available labor resources in an economy are being utilized to their maximum potential. It is generally accepted that achieving 100% employment is unlikely and not practical due to various factors such as technological advancements, labor market dynamics, and the existence of frictional unemployment (which refers to temporary unemployment while individuals search for new jobs).
While it may be possible to achieve an unemployment rate below the full employment level, it would pose certain problems and challenges.
Firstly, a low unemployment rate can lead to labor shortages and skill gaps, as there may not be enough workers available to meet the demands of various industries and sectors. This can result in increased competition among employers to attract and retain skilled workers, leading to wage inflation and potentially higher costs for businesses.
Secondly, a very low unemployment rate can also lead to decreased labor market mobility. When there are limited job opportunities, individuals may stay in their current jobs even if they are not the best match for their skills and interests. This can result in a mismatch between workers and available job openings, leading to decreased productivity and inefficiency in the labor market.
Additionally, a low unemployment rate can also create social issues and inequalities. Certain groups of individuals, such as the long-term unemployed, may face difficulty in securing employment even during periods of low overall unemployment. This can lead to increased income inequality and social unrest.
Finally, an unemployment rate below full employment can also impact macroeconomic stability. It can create imbalances in the economy, such as an overheating labor market, which can result in inflationary pressures. Central banks may need to respond by tightening monetary policy to prevent inflation from spiraling out of control, which can have wider implications for economic growth and stability.
In summary, achieving an unemployment rate below full employment is possible but can lead to various challenges and problems such as labor shortages, skill gaps, decreased labor market mobility, social inequalities, and macroeconomic imbalances. It is crucial for policymakers to consider these factors when aiming to achieve and maintain a healthy and balanced labor market.