Home Page                      Contact Us                      About Us                      Privacy Policy                       Terms of Use                      Advertise 

Home » Determinants of the Level of National Income and Employment » Full Employment


Full Employment:


Definition and Explanation:


The concept of full employment has been defined differently by different economists. Lord Beveridge defines full employment as:


“Having always more vacant jobs men”.


Keynes defines full employment negatively as:


“The absence of involuntary unemployment”.


If we take literary meaning of full employment, it means complete absence of unemployment. Then practically speaking, it is not possible to achieve full employment. Some sort of unemployment is bound exist in a country.


For instances, there are some people who remain unemployed for a short time due to changing over from one job to another. Then there are some people who are learning a new job and are on probation getting a very meager sum or receiving nothing. All such person are fractionally unemployed. So long as the number of fractionally unemployed person dose not exceed three to five percent the total labor force, then full employment is said to exist.


We may, If we like name it as high level of employment. It should be noted that while considering the aggregate labor force a country, children, old persons, disabled persons, and the drones who do not care work, or who are not able to work are excluded from the total labor force. The total labor force of a country consists of only those persons who are able and willing to work.


We can thus up that the existence of full employment all that is necessary is that there should  be at least:


“As may unfilled jobs as there are unemployed persons and that normal time lag between losing one job and finding another is short”.


Measures of Full Employment:


There are three main measures by which full employment can be attained and maintained in a country. They are:


(1) Fiscal Policy.


(2) Monetary Policy.


(3) Public Works.


(1) Fiscal Policy:


Fiscal policy refers to the measures which a government takes for the management of its budget. It is the desire  of every government that the budget of a country is shaped in such a manner that it should  help in slowing down the swings of business cycle and maintaining high progressive level of employment without causing inflation in the country. So when a government finds that private investment is decreasing in a country and the income of people is falling, it increases public expenditure. In order to encourage private investment, it gives grant or bounties or relief in taxation to the people. When private investment increases too high, the government reduces its own expenditure and increases taxes so that full employment without inflation is achieved at.


(2) Monetary Measures:


Monetary policy refers to the measures which a, government takes for regulating the money supply in a country. It is generally associated with the supply of credit and the rate of interest- The government can encourage investment and maintain high level of employment by lowering the rate of interest and keeping the supply of money adequate.


(3) Construction of Public Works:


By public works is meant the construction of projects designed for public welfare or works carried out by government with the public funds. Highways, canals, bridges, parks, and public buildings, etc.. etc., are examples of public works. In the period of depression, government can increase the level of employment by launching public works program. In case of over full employment, the expenditure on public works can be curtailed so that the level of full employment is attained at without inflation. It should be noted that in a country it is not simply the high level employment or full employment which is the desired goal. If a country achieves full employment through inflation, then certainly its consequences will be disastrous. So what the economy needs is that there should be high level of employment but not accompanied by inflation.

Relevant Articles:

» Psychological Law of Consumption
» Propensity to Consume
» Determinants of the Consumption Function
» Concept of Saving
» Concept of Propensity to Save/Saving Function
» Concept of Investment
» Concept of Marginal Efficiency of Capital (MEC)
» Factors on Which Marginal Efficiency of Capital Depends
» Concept of Employment and Full Employment
» Full Employment

Principles and Theories of Micro Economics
Definition and Explanation of Economics
Theory of Consumer Behavior
Indifference Curve Analysis of Consumer's Equilibrium
Theory of Demand
Theory of Supply
Elasticity of Demand
Elasticity of Supply
Equilibrium of Demand and Supply
Economic Resources
Scale of Production
Laws of Returns
Production Function
Cost Analysis
Various Revenue Concepts
Price and output Determination Under Perfect Competition
Price and Output Determination Under Monopoly
Price and Output Determination Under Monopolistic/Imperfect Competition
Theory of Factor Pricing OR Theory of Distribution
Principles and Theories of Macro Economics
National Income and Its Measurement
Principles of Public Finance
Public Revenue and Taxation
National Debt and Income Determination
Fiscal Policy
Determinants of the Level of National Income and Employment
Determination of National Income
Theories of Employment
Theory of International Trade
Balance of Payments
Commercial Policy
Development and Planning Economics
Introduction to Development Economics
Features of Developing Countries
Economic Development and Economic Growth
Theories of Under Development
Theories of Economic Growth
Agriculture and Economic Development
Monetary Economics and Public Finance

History of Money

                   Home Page                Contact Us                About Us                Privacy Policy                Terms of Use                Advertise               

All the material on this site is the property of economicsconcepts.com. No part of this website may be reproduced without permission of economics concepts.
All rights reserved Copyright
© 2010 - 2015