Fractional Unemployment

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Definition: Fractional Unemployment




Full Definition of Fractional Unemployment


Fractional unemployment is the portion of unemployment linked with a country’s normal state of economy. Fractional unemployment includes job search as its constituents. In this type of unemployment, employment is available but is not utilized by job seekers for the absence of proper information or lack of mobility.

Unemployment Rate

The unemployment rate is the percentage of the entire labour force that is unemployed. The unemployment rate includes only those who wish to work in their own volition and looking for employment in a proactive manner.

Natural Unemployment

Natural unemployment is described as the smallest unemployment rate that a country’s economy can maintain over a long period of time. Natural unemployment is the lowest unemployment rate at which inflation of a country remains constant.

According to Keynesian economists, a nation’s government can bring down its unemployment rate if it admits a greater inflation level. Critics state that this is a temporary measure and unemployment would rebound keeping inflation at higher levels. According to some economists, natural unemployment can be minimized by implementing higher labour market flexibility.

Frictional Unemployment

Frictional unemployment is described as unemployment that is forever exhibited in an economy. Frictional unemployment is a consequence of temporary transitions that are executed by employers and workers who are privy to incomplete or inconsistent information.

Full Employment

Full employment is a scenario where all usable resources of labour are exploited in maximum economically efficient manner. Full employment personifies the maximum quantum of unskilled and skilled labour that is capable of being employed at any moment of time. Rest of unemployment is frictional. A full employment scenario would lead to inflation -as a rise in disposable income would catalyze price increases.

Misery Index

The misery index is described as the amount of upbeat for a particular economy. The misery index is calculated by the sum of the inflation rate and the unemployment rate in a specific period of time. Thus:

Misery index = Inflation rate + Unemployment rate

A higher index translates into a deteriorating economic climate for a country. The converse i.e a lower index means an improving economic view also holds true.


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Definition Sources


Definitions for Fractional Unemployment are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 2nd April, 2020 | 71 Views.