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

April 13, 2018
By Didem Tuzemen, Senior Economist


Research Working PaperThe natural rate of unemployment has declined in the past two decades due to demographic and technological changes.

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.

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RWP 18-03, April 2018

JEL Classification: E24, J21, J23, J24

Article Citation

  • Tüzemen, Didem. 2018. “Job Polarization and the Natural Rate of Unemployment in the United States.” Federal Reserve Bank of Kansas City, Research Working Paper No. 18-03, April. Available at https://doi.org/10.18651/RWP2018-03

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