What level of unemployment is the natural unemployment rate estimated to be?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There is no official estimate of the natural rate of unemployment.  Also, we should note that the estimates can change over time.  Right now, some estimates have the natural rate of unemployment at somewhere around 5.6%.  This has gone up since the recession that is associated with the financial crash of 2008.  

The natural rate of unemployment has gone up because there is more frictional unemployment.  This happens largely because fewer people are willing to leave their jobs since they fear they will not get another job if they quit.  This means that there are fewer job openings available to workers who are entering the labor force after finishing school or taking time off from working.  This has raised the estimated natural rate of unemployment by almost a full percentage point.


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