Why does full employment never result in 0% unemployment?

Answer 1

Unemplyment never reaches 0, its impossible.
Theres basically 3 different types: Employed, Unemployed, and Not in the labor force.

Its easy to seperate employed from the other 2, but its difficult to seperate unemployed from not in labor force.

Unemployed means your not working right now, but you're making an effort to find a job, or you have a job lined up in the near future and are just waiting on the start date. So unemployment cant reach 0 because theres always people switching jobs. It takes time to get, or transfer to that new job, so in that time being, your considered unemployed.

Theres also sectoral shifts occuring. Lets say the auto-industry has died out in your country, but electronics is booming. It takes time for those people to get re-trained, or find new jobs, etc...

And theres no such thing as full employment, that would mean 0% unemployment.

Answer 2

Full Employment Unemployment Rate

Answer 3

The economic definition of full employment is the market determined level of labour employed. Unemployment is defined as the mismatch between labour supply and demand, or, those who would like to work, but do no have a job

In a free market and under the Classical model, this occurs where the labour demand and labour supply curves intersect. In this case, there IS zero unemployment, as all those who want a job (at the current real wage) are able to get one, due to demand equalling supply. This is assuming that all jobs and workers are the same. However, in real life this is not the case. There is often a mismatch between worker skills and the job requirements. This is frictional unemployment. Frictional unemployment is considered temporary, but can lead to structural unemployment if workers are without jobs for a long time. This is because the workers may lose skills and therefore be unable to met job requirements causing (structural) permanent unemployment

In the case of a minimum wage rule or the Keynesian model (with the efficient wage model), the real wage is "preset" and is above the equilbrium level. The full employment level of employment is the labour demanded at the real wage. This causes permanent unemployment at the full employment level as supply will always be greater than demand (more people are willing to work at the real wage than employed), even though the economy is at "full employment"

Answer 4

0% unemployment is not desirable - it would push the economy toward capacity in which case the pressure on wages and prices would cause inflation without a gain in output. In reality, the dynamics of the economy are such that it would be impossible that there wouldn't be workers unemployed by some percentage at any given time - in reality full employment (which is the presence of structural unemployment) is on the order of 3-5%.

Answer 5

There are always jobs being created and destroyed in a dynamic economy causing people to lose jobs, and there are people entering the work force for the first time. This means there is a constant flow into the pool of the unemployed, and it takes time for them to find a job that is the best match their skills and interests. As long as new jobs are being created at the same rate as job seekers the unemployment rate is low and fairly steady. When a recession happens the job creation rate falls and unemployment rate rises. When the economy recovers jobs grow faster than the number of new job seekers and the unemployment rate falls back to previous levels.

Answer 6

And, it never will. First off, there is no such thing as "full employment", and also there are too many people out there who do not want to work. They would rather live off the taxpayers, so there will never be full employment.