Voluntary unemployment is a part of the population of unemployed people who choose not to work. In other words, they deliberately choose to be unemployed even though jobs are available. Two main reasons are low wages or incompatibility with open positions.
More detailed explanation
Please note, those who are unemployed voluntarily are part of the labor force. They exclude working-age populations who are not actively seeking work, such as homemakers and full-time schools. The latter is not in the labor force, thus excluded from the unemployment calculation.
Voluntary unemployment occurs when someone chooses not to work, even though the opportunity is available. Examples of voluntary unemployment are people who refuse certain job offers because their salaries or benefits are not in line with expectations.
When you are a manager and stop working because of office politics, you choose not to work. The reason is that the types of jobs available do not offer salaries as high as your expectations. In this case, you belong to the voluntary unemployment group.
The difference with involuntary unemployment
There is a difference between voluntary and involuntary unemployment. If you are unemployed voluntarily, it is because of your choice.
In contrast, if you are unemployed involuntarily, it is because there are no types of job openings that fit your expertise. Or, you do not have the appropriate qualifications from the employer.
Most frictional unemployment is voluntary. Unemployed workers choose to continue to look for work with a suitable salary, rather than taking any job they find and ideal for their expertise.
Causes of voluntary unemployment
There are several reasons why workers choose not to work. Wages and welfare benefits are the main determinants. People are unemployed voluntarily because the equilibrium wage level is lower than their reservation wages.
Considerable unemployment benefits from the government are another reason. People choose to remain unemployed because they think they are more financially prosperous with unemployment benefits than taking low-paying jobs.
High marginal income tax also prevents people from looking for work. It is because high taxes reduce the effective salary they bring home.
Finally, people are unemployed voluntarily because they hope to find work that is more suitable for their skills or qualifications. Or, some work according to their expertise but too trivial and boring. So they didn’t take it.