Question

Why is some involuntary unemployment desirable in the market for labour? [max words: 150] .

Answer 1

Involuntary unemployment refers to a market situation where all those who are willing and able to work are not able to find the job at the prevailing wage rate. It is also associated with the deficient demand in the economy. Involuntary unemployment does not occur only due to the malfunctioning of an individual but also due to the malfunctioning of an economy i.e inability to create jobs. Sometimes workers are not willing to work at the lower wage rate which also causes involuntary unemployment.

Full-Employment refers to the situation where all the resources are fully used up in most efficient way and there is no involuntary unemployment. However, this is only the ideal situation but it is unreachable in real life.  

Only the Natural rate of unemployment is desirable and achievable because it considers the frictional and structural unemployment. Some involuntary unemployment is desirable because this will motivate the unemployed section to improve their skills according to the desired structure. Structural unemployment occurs due to unmatching between the desired skills and the skills owned by the unemployed individual. The desire to improve the technological structure causes Structural Unemployment.

Also, Frictional unemployment is unavoidable because it is caused due to a transition in jobs.  Therefore it is said that some involuntary unemployment is desirable because it also involves structural, frictional unemployment.