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.
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.
