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"Natural Unemployment Rate"

By Kimberly Amadeo, About.com

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:

  1. Frictional unemployment that comes from job turnover,
  2. Structural unemployment that is caused by a mis-match between job skills and job availability,
  3. 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.

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