what is involuntary unemployment
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Involuntary unemployment occurs when a person is willing to work at the prevailing wage yet is unemployed. Involuntary unemployment is distinguished from voluntary unemployment, where workers choose not to work because their reservation wage is higher than the prevailing wage.
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Involuntary unemployment is the condition, when a person is willing to work, but is still unemployed.
- An economic situation in which people are able to work on or just below the market wage, but still are not able to is involuntary employment.
- Such workers are usually prevented to work outside of their direct control by particular factors.
- These considerations may include aggregate demand deficit, labor market instabilities, implicit wage bargaining and wage efficiency theory.
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