Working Paper

Job Polarization and the Natural Rate of Unemployment in the United States

Abstract: I present a new estimate of the natural rate of unemployment in the United States that accounts for changes in the age, sex, and skill composition of the labor force. Using micro-level data from the Current Population Survey for the period 1994-2017, I find that the natural rate of unemployment declined by 0.5 percentage point since 1994 and currently stands at 4.5 percent. My projections show that ongoing demographic and technological changes could lower the trend rate further to 4.4 percent by the end of 2022.

Keywords: Natural Rate of Unemployment; Job Polarization; Labor Demand; Skills; Aging;

JEL Classification: E24; J21; J23; J24;

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Research Working Paper

Publication Date: 2018-03-15

Number: RWP 18-3

Pages: 6 pages