Does Labour Market Rationing Entail (Involuntary) Unemployment

This article argues in favor of drawing a distinction between the concepts of labour rationing and unemployment, the former referring to the occurrence of excess supply in a given labour market, the latter to job-waiting activity. In a first part, the literature on the possible consequences of labour rationing is surveyed. In a second part, a series of concepts and definitions which enable to single out the conditions under which labour rationing can result in involuntary unemployment, are put forward. Lucas’ widely accepted view that some job alternatives are always available will thereby be challenged. In part three, the relationship between labour rationing and (involuntary) unemployment is examined in the context of three regimes, a Walrasian, a Smithian and a Keynesian economy.