Cyclical unemployment explains why unemployment rises during a recession and falls during an economic expansion, but what explains the remaining level of unemployment even in good economic times? Why is the unemployment rate never zero? Even when the U.S. economy is growing strongly, the unemployment rate only rarely dips as low as 4%. Moreover, the discussion earlier in this chapter pointed out that unemployment rates in many European countries like Italy, France, and Germany have often been remarkably high at various times in the last few decades. Why does some level of unemployment persist even when economies are growing strongly? Why are unemployment rates continually higher in certain economies, through good economic years and bad? Economists have a term to describe the remaining level of unemployment that occurs even when the economy is healthy: they call it the natural rate of unemployment.
What Causes Changes in Unemployment over the Long Run
1
of
16
- 1 -
- 2 - The Long Run: The Natural Rate of Unemployment
- 3 - Frictional Unemployment
- 4 - Structural Unemployment
- 5 - Natural Unemployment and Potential Real GDP
- 6 - Productivity Shifts and the Natural Rate of Unemployment
- 7 - Public Policy and the Natural Rate of Unemployment
- 8 - The Natural Rate of Unemployment in Recent Years
- 9 - The Natural Rate of Unemployment in Europe
- 10 - A Preview of Policies to Fight Unemployment
- 11 - Key Concepts and Summary
- 12 - Self-Check Questions
- 13 - Review Questions
- 14 - Critical Thinking Questions
- 15 - Problems
- 16 - References
- View all as one page
1
of
16
- 1 -
- 2 - The Long Run: The Natural Rate of Unemployment
- 3 - Frictional Unemployment
- 4 - Structural Unemployment
- 5 - Natural Unemployment and Potential Real GDP
- 6 - Productivity Shifts and the Natural Rate of Unemployment
- 7 - Public Policy and the Natural Rate of Unemployment
- 8 - The Natural Rate of Unemployment in Recent Years
- 9 - The Natural Rate of Unemployment in Europe
- 10 - A Preview of Policies to Fight Unemployment
- 11 - Key Concepts and Summary
- 12 - Self-Check Questions
- 13 - Review Questions
- 14 - Critical Thinking Questions
- 15 - Problems
- 16 - References
- View all as one page