Definition: The natural rate of unemployment is the healthy unemployment rate that will always occur in an economy, unless it is severely overheated. Some level of unemployment results from:
- Frictional unemployment that comes from job turnover,
- Structural unemployment that is caused by a mis-match between job skills and job availability,
- Unemployment caused by minimum wages laws and unions.
Also Known As: strutural unemployment rate frictional unemployment rate
Examples:
Economists debate over whether the natural rate of unemployment is 4% or less.
