Above Full Employment Equilibrium refers to a macroeconomic state in which the level of employment in an economy exceeds the maximum sustainable level of employment, also known as full employment. This occurs when the demand for labor surpasses the available supply of labor, resulting in a situation where all individuals who are willing and able to work are already employed. In this state, there is a shortage of labor, leading to increased competition among employers to attract and retain workers. This can result in higher wages, improved working conditions, and increased productivity. However, it may also lead to inflationary pressures as businesses pass on the higher labor costs to consumers.
Above Full Employment Equilibrium refers to a situation in the economy where the level of employment exceeds the full employment level. Full employment is the level of employment where all available labor resources are being utilised, and there is no cyclical unemployment. When the level of employment exceeds this point, it may lead to inflationary pressures in the economy as the demand for labor exceeds the available supply, leading to higher wages and prices. This situation may require government intervention to manage the inflationary pressures and maintain economic stability.
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This glossary post was last updated: 29th March 2024.
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