Full employment is an economic state where labor resources are being used most efficiently. It includes the use of the most skilled and unskilled workers. Full employment does not mean that everyone within the economy is employed.
Even in a full employment economy, there are levels of unemployment, which are referred to as natural or cyclical unemployment, which is made up of two components. Frictional unemployment occurs when people are unemployed because they are moving, just starting a job search, or quitting their existing job for a better one. Structural unemployment occurs when people are unemployed because they can’t find work or companies can’t find labor.