Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is the proportion of people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the reference period.
Unemployment is measured by the unemployment rate, which is the number of people who are unemployed as a percentage of the labour force (the total number of people employed added to those unemployed).
Full employment is an economic situation in which there is no cyclical or deficient-demand unemployment. Full employment does not entail the disappearance of all unemployment, as other kinds of unemployment, namely structural and frictional, may remain. Full employment does not entail 100% employment-to-population ratio. For instance, workers who are "between jobs" for short periods of time as they search for better employment are not counted against full employment, as such unemployment is frictional rather than cyclical. An economy with full employment might also have unemployment or underemployment where part-time workers cannot find jobs appropriate to their skill level, as such unemployment is considered structural rather than cyclical. Full employment marks the point past which expansionary fiscal and/or monetary policy cannot reduce unemployment any further without causing inflation.
Some economists define full employment somewhat differently, as the unemployment rate at which inflation does not continuously increase. Advocacy of avoiding accelerating inflation is based on a theory centered on the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) and those who hold it usually mean NAIRU when speaking of full employment. The NAIRU has also been described by Milton Friedman, among others, as the "natural" rate of unemployment. Such views tend to emphasize sustainability, noting that a government cannot sustain unemployment rates below the NAIRU forever: inflation will continue to grow so long as unemployment lies below the NAIRU.
Structural unemployment is a form of involuntary unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers (also known as the skills gap). Structural unemployment is often brought about by technological changes that make the job skills of many workers obsolete.
Structural unemployment is one of three categories of unemployment distinguished by economists, the others being frictional unemployment and cyclical unemployment.
Frictional unemployment is a form of unemployment reflecting the gap between someone voluntarily leaving a job and finding another. As such, it is sometimes called search unemployment, though it also includes gaps in employment when transferring from one job to another.
Frictional unemployment is one of the three broad categories of unemployment, the others being structural unemployment and cyclical unemployment. Causes of frictional unemployment include better job opportunities, services, salary and wages, dissatisfaction with the previous job, and strikes by trade unions and other forms of non-unionized work actions.