9

To me, it seems that it has increased, not decreased, due to the factors you mention. Yes, transportation and information networks enable workforce movement. But they also enable movement of goods and information - and because goods and information are more mobile than humans, they profit more, and the results of their portability outpaces the results of the ...


6

Full employment is a more general term, which has much less implication than natural rate of employment. My experience reading a lot of economics papers is that careful authors do not mix the two concepts. Stricto sensu, full employment should mean 100% of the workforce is employed. But when we are talking about periods such as the trente glorieuses, the ...


4

One definition of the natural rate of unemployment is the NAIRU: non-accelerating-inflation rate of unemployment. The classic story of the money illusion and unemployment works like this: Both Friedman and Phelps argued that the government could not permanently trade higher inflation for lower unemployment. Imagine that unemployment is at the natural ...


2

I expect that in the UK it has increased due to the benefit system, we now have lots of unemployment in some parts of the north, but little movement of unskilled labour. However when the mills were built worker moved from all over the UK to them. Therefore I don’t know how the different effect can be separated.


2

This was supposed to be a comment to @rumtscho, but it turns out to be too long, and then I kept adding information, so perhaps this deserves to be its own answer Is an increase in mobility really detrimental for efficiency? Imagine a world with non-mobile capital and labor. Now we increase mobility of capital (but not labor). Now @rumtscho argues, this ...


1

Mankiw's definition alludes to a situation where the only source of unemployment is frictions and imperfections in the labor/human capital market (you could also add inherent rigidities like "specificity" of labor/human capital, which is the price to pay for specialization). But also, in "imperfections" Mankiw may also include "wage rigidities". We could ...


1

What determines interest rates? Let's try to understand the emergence of interest rates from first principles. We'll imagine an island inhabited only by Robinson Crusoe and Friday. For sustenance, they pick coconuts - the only food source available to them. Each coconut can either be consumed immediately or saved up for future use. One day, Crusoe does not ...


1

Sovereign rates in developed countries represent the credit risk-free curve. What maturity on the curve you want to choose is an analytical choice. The natural rate is in reference to a risk-free curve, and so should align with the sovereign curve. Also, “Natural rate” is somewhat dated at this point, the preference is to use a more neutral term like r*.


1

Cyclical unemployment $U^C$ is by definition difference between actual observed rate of employment $U$ and the natural rate of employment $U^N$ so we have: $U^C_t \equiv U_t-U_t^N$, see for example this paper. Hence cyclical unemployment can be negative if actual observed rate of unemployment is lower than natural rate, because it is defined as a difference ...


1

Potential benefits of labor market reforms such as a reduction in job security and trade union power: To find the answer to a reduction in job security, just apply it to your personal life(assuming you are employed). If labor market reform comes in and puts my job at risk, I would become more competitive and work harder in order to keep my job. This ...


1

In the Blanchard book itself, when discussing the WS-PS model there is also a definition similar to that given in Mankiw. Relating to the first definition you gave, in the long run expectations adapt and expected and observed price levels match. That relates the first and third definition. The second definition goes through the definition of the Phillips ...


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