Enter the number of frictionally unemployed people, the number of structurally unemployed people, and the total labor force to calculate the natural rate of unemployment.
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Natural Rate of Unemployment
The following equation is used to calculate the natural rate of unemployment.
NU = (FU + SU) / LF*100
- Where NU is the natural rate of unemployment (%)
- FU is the number of people frictionally unemployed
- SU is the number of people structurally unemployed
- LF is the total number of people in the labor force.
To calculate the natural rate of unemployment, sum the number of people frictionally unemployed with those structurally unemployed, then divide by the number of people in the labor force. Finally, multiply by 100 to express as a percentage.
Natural Rate of Unemployment Definition
A natural rate of unemployment is defined as the number of people that are expected to be unemployed in a healthy economy.
Natural Rate of Unemployment Example
How to calculate a natural rate of unemployment?
- First, determine the number of people frictionally unemployed.
Calculate the number of people frictionally unemployed.
- Next, determine the number of people structurally unemployed.
Calculate the number of people structurally unemployed.
- Next, determine the total labor force.
Calculate the number of people in the labor force.
- Finally, calculate the natural rate.
Calculate the natural rate of unemployment.
FAQ
Natural unemployment is the rate at which people are unemployed in a healthy economy since unemployment will never reach 0%, this usually lies between e-6%.
Frictionally unemployed means that someone is unemployed due to the time it takes to find a job.
Structurally unemployed means someone that is unemployed because they cannot find a job due to an imbalance in available jobs and job seekers.
