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Difference between Voluntary and Involuntary Unemployment

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Difference between Voluntary and Involuntary Unemployment!

An involuntary unemployment means a situation in which all able persons who are willing to work at the prevailing wage rate do not get work.

Such people are (i) physically and mentally fit to work and are also (ii) willing to work at the going rate but are out of Job.

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Thus, their unemployment is involuntary (i.e., not voluntary) because they are rendered unemployed against their wishes.

This type of unemployment is due to deficiency of aggregate demand sufficient to ensure full employment. It indicates excess supply of labour which the rigid wage-rate has failed to eliminate. In short, if involuntary unemployment exists, the economy cannot be said to be at the level of full employment equilibrium. It will indicate under-employment equilibrium in the economy.

Difference between voluntary unemployment and involuntary unemployment:

It needs to be understood that involuntary unemployment is different from voluntary unemployment. Voluntary unemployment refers to a situation when persons who are able to work but are not willing to work although suitable work is available for them. In other words, they are voluntarily unemployed, i.e., unemployed of their own will.

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Such persons are not included in labour force of the country. On the contrary, involuntary unemployment occurs when those who are able and willing to work at the going wage rate do not get work. Hence, they are unemployed against their wishes.

Significance of distinction (D201 1C):

Significance of distinction is that the magnitude of unemployment in an economy, is reflected by the magnitude of involuntary unemployment since the former includes only involuntary unemployment. According to Keynes, involuntary unemployment arises due to insufficiency of effective demand which can be solved by stepping up aggregate demand through government intervention.

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