Unemployment benefits and the natural rate of unemployment An increase in unemployment benefits leads to an increase in the natural rate of unemployment Mark-ups and the natural rate of unemployment An increase in mark ups decreases the real wage and leads to an increase in the natural rate of unemployment NATURAL RATE OF UNEMPLOYMENT Because the equilibrium rate of unemployment reflects the structure of the economy, a better name for the natural rate of unemployment is the structural rate of unemployment From unemployment to employment Associated with the natural rate of unemployment is a natural level of employment == = 1 - employment in terms of the labour force and the unemployment rate equals: N= - L (1 - ) The natural level of employment Nn is given by: Nn= L(1 - n) From employment to output
Unemployment benefits and the natural rate of unemployment An increase in unemployment benefits leads to an increase in the natural rate of unemployment Mark-ups and the natural rate of unemployment An increase in mark ups decreases the real wage and leads to an increase in the natural rate of unemployment NATURAL RATE OF UNEMPLOYMENT Because the equilibrium rate of unemployment reflects the structure of the economy, a better name for the natural rate of unemployment is the structural rate of unemployment From unemployment to employment Associated with the natural rate of unemployment is a natural level of employment == = 1 - employment in terms of the labour force and the unemployment rate equals: N= - L (1 - ) The natural level of employment Nn is given by: Nn= L(1 - n) From employment to output
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