Demography and the Natural Rate

Demography and the Natural Rate:

Initial the natural rate changes as the relative age as well as educational distribution of the labor force changes. Teenagers have elevated unemployment rates than adults; therefore an economy with a lot of teenagers will have a higher natural rate. More experienced as well as more skilled workers find looking for a job an easier experience, and take fewer times to find a new job when they leave an old one therefore the natural rate of unemployment will fall when the labor force becomes more experienced and more skilled. Women utilized to have higher unemployment rates than men--although this is no longer true in the U.S. The more educated be likely to have lower rates of unemployment than the less well educated. African-Americans have elevated unemployment rates than whites.

A large part of the estimated increase in the natural rate from 5 percent or so in the 1960s to 6 to 7 percent by the end of the 1970s was due to changing demography. A few component of the decline in the natural rate since was due to the increasing experience at searching for jobs of the very large baby-boom cohort. However the exact quantitative relationship between demography and the natural rate is not well understood.

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