Full-capacity Employment, Unemployment and Labour Hoarding

Abstract

In this chapter we integrate UV. analysis—which determines unemployment due to market imperfections—and macroeconomic vintage analysis—which determines full-capacity employment. The resulting analysis enables us to distinguish between two types of structural unemployment: one type due to market imperfections, the other due to a shortage of capacity demand for labour. In Dutch discussions in the 1970s these two types were referred to respectively as ‘qualitative’ and ‘quantitative’ structural unemployment. Since the analysis enables us to distinguish between actual demand for labour and capacity demand, we can also observe labour hoarding. As a consequence, for a given supply of labour the under-utilisation of labour can be measured and decomposed into several components. These components are cyclical unemployment, quantitative and qualitative structural unemployment and labour hoarding.KeywordsLabour MarketLabour SupplyCapacity UtilisationMarket ImperfectionStructural UnemploymentThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.