From Labor Rationing to (Involuntary) Unemployment: A Conceptual Elucidation

This article argues in favor of drawing a distinction between the concepts of labor rationing and unemployment. Labor rationing refers to the occurrence of excess supply in a given labor market and unemployment to the job searching activity. The former, it will be argued, is a necessary yet insufficient condition for the latter. Lucas' view that the involuntary unemployment concept is meaningless will be challenged. A series of concepts and definitions will be put forward to allow singling out of the conditions under which labor rationing can result in involuntary unemployment.