Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Chicago
Chicago Fed Letter
Changing Labor Force Composition and the Natural Rate of Unemployment
Daniel Aaronson
Luojia Hu
Arian Seifoddini
Daniel G. Sullivan
Abstract

This article discusses why changes in the composition of the labor force may have lowered the natural (or trend) rate of unemployment—the unemployment rate that would prevail in an economy making full use of its productive resources—to 5 percent or less. A lower natural rate may help explain why wage inflation and price inflation remain low despite actual unemployment recently reaching 5.5 percent—a figure only slightly above prominent estimates of the natural rate, such as that of the Congressional Budget Office (CBO). Demographic and other changes should continue to lower the natural rate for at least the remainder of the decade.


Download Full text
Cite this item
Daniel Aaronson & Luojia Hu & Arian Seifoddini & Daniel G. Sullivan, "Changing Labor Force Composition and the Natural Rate of Unemployment" , Federal Reserve Bank of Chicago, Chicago Fed Letter, number 338, 2015.
More from this series
JEL Classification:
Subject headings:
Keywords: labor; unemployment
For corrections, contact Bernie Flores ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal