What Causes Changes in Unemployment over the Long Run

Self-Check Questions

Is the increase in labor force participation rates among women better thought of as causing an increase in cyclical unemployment or an increase in the natural rate of unemployment? Why?

Hint:

The increase in labor supply was a social demographic trend—it was not caused by the economy falling into a recession. Therefore, the influx of women into the work force increased the natural rate of unemployment.

Many college students graduate from college before they have found a job. When graduates begin to look for a job, they are counted as what category of unemployed?

Hint:

New entrants to the labor force, whether from college or otherwise, are counted as frictionally unemployed until they find a job.