A Business Encyclopedia

Voluntary Unemployment

Definition: The Voluntary Unemployment refers to the situation when the worker deliberately chooses not to work because of a low wage scale or not able to find out the suitable employment for him.

In other words, the voluntary unemployment is when the person decides not to participate in the labor market, not because of the unavailability of jobs, but because of not finding the jobs of his/her choice or is not satisfied with the wage system.

The voluntary unemployment also gets created when the worker is neither willing to work nor searches for a job, as he is satisfied with the amount given by the government in the form of unemployment benefits. High-income tax rates could also be one of the reasons behind a worker not choosing to work.

The lack of job information can lead to the unemployment. Such as first-time job seeker might not have sufficient information about the nature of a job and decides to remain unemployed until the time he gets the desired opportunity. Frictional unemployment is also a form of voluntary unemployment wherein the worker deliberately leaves his job in the search for better job pursuits.

Most of the times the unemployment is involuntary caused due to Socio-economic factors such as aggregate demand, market structure, government intervention, technological advancement, etc. The involuntary unemployment is therefore beyond the worker’s control and unlike voluntary unemployment, it is not explicit to an individual.

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