The concepts of voluntary and involuntary unemployment
Voluntary unemployment describes workers who choose not to accept available jobs. Involuntary unemployment describes workers who want a job at the going wage but cannot find one.
Real World
When the UK raised the National Living Wage in 2024, some economists argued it pushed a small number of low-skilled workers into voluntary unemployment, as reservation wages rose relative to net income from work.
Exam Focus
Define involuntary unemployment precisely — workers willing to work at the current market wage but unable to find a job — to avoid confusing it with real wage unemployment.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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