Talk:Natural rate of unemployment

Neither Philips nor Friedman 'discovered' this phenomenon.

The mechanisms by which Capitalism exploits unemployment was clearly outlined by Karl Marx 101 years earlier in Das Kapital, in his critique of what Engels had coined the "Reserve Army of Labor." https://en.wikipedia.org/wiki/Reserve_army_of_labour

"Relative surplus-population is therefore the pivot upon which the law of demand and supply of labour works" the Wikipedia post then explains "The availability of labour influences wage rates and the larger the unemployed workforce grows, the more this forces down wage rates; conversely, if there are plenty jobs available and unemployment is low, this tends to raise the average level of wages—in that case workers are able to change jobs rapidly to get better pay

or as Marx put it more eloquently: "Capitalism requires a reserve army of the unemployed to function."

While one can argue that they had different feelings and prescriptions, the observation is identical. All these men had to do to "co-invent" this was to be recommended the same book at a dinner party. — Preceding unsigned comment added by 69.54.136.105 (talk) 17:52, 4 September 2023 (UTC)

Friedman and the Natural Rate

I think there was a need to add the original text from the 1968 article. This might not be in the best place: possibly there should be a seperate section or subsection: please feel free to alter if it improves the overall readability of the article. Byronmercury (talk) 14:56, 26 July 2012 (UTC)

Thanks Byelf2007, improved things: I also thought of removing the NAIRU section (since it has its own page). Reads better now.Byronmercury (talk) 10:11, 21 September 2012 (UTC)

critics and empirics

need to expand the critics section. Also, perhaps a new section on methods of estimation and perhaps estimates of natural rate?Byronmercury (talk) 18:59, 28 July 2012 (UTC)

"Phillips curve" or "Phillips-curve"?

Sometimes there is confusion about whether there should be a hyphen or not. To the best of my knowledge, there is none in a sentence like "This is a Phillips curve;" i.e., where the terms takes the form of a noun. However, when the term is used as an adjective, the hyphen should be there; as in "This is a Phillips-curve correlation". I am not a native English speaker, but beieve me, an economics journal editor once gave me that advice.--HJensen, talk 11:33, 16 August 2007 (UTC)

Wow. That is a fascinating distinction! However now I'm wracking my brain trying to recall how many times I've made that error through the years. Thank you for teaching me something!--Palabrazo 22:42, 17 August 2007 (UTC)

You're welcome. And I still constantly make the confusion myself. Good thing the hyphen is silent so you don't notice in oral presentations! :-)--HJensen, talk 11:30, 18 August 2007 (UTC)

Lack of sources

Where is definition from? —Preceding unsigned comment added by 213.164.125.199 (talk) 11:59, 24 November 2007 (UTC)

Friedman and Phelps. See Footnote 1, 4 and 5. --HJensen, talk 21:07, 24 November 2007 (UTC)

Is this the same as NAIRU?

Is it? NAIRU. Fresheneesz (talk) 21:48, 5 March 2009 (UTC)

Esoteric Much

I'm taking intro to Econ, and am actually learning about the subject of Macroeconomics and Unemployment, Inflation, and GDP, and even I have a problem getting through the first few sentences of this article. Now, I understand that Wikipedia wants to be "The Free Encyclopedia," but this does not have to be the encyclopedia of print, where one has to have a near masters level background in subjects to understand the subject they are looking up.

This isn't the only article like this, I could point to any math article and say the same thing, but this is becoming a problem, and I would think that economics, the most applicable and practical of the social sciences--at least in my opinion--would be less incomprehensible. I know this may seem like a rant, and in a way it is, but my suggestion for this article is a complete rewording of it, or a more simplistic explanation.

So, for example, the way I am currently learning about the Natural Rate of Unemployment is that it is the combination of both frictional and structural unemployment. That means that the Natural Unemployment Rate is not that of the whole Unemployment rate, but it is the combination of people who are unemployed because they are looking for jobs that use more of their skill sets, and people whose jobs have been permanently displaced due to market changes. If someone with a Masters in Teaching is looking for a job, it is frictional unemployment if they do not go after a restaurant job, but instead look for a teaching job. They are looking for a job that matches their skill set and being unemployed in the mean time. It is structural unemployment when someone is fired because of the fact that their job is no longer necessary in the market. For example, we no longer need slave auctioneers (a tad extreme, but it gets the point across), so if you are put back out into the work force, you have the skills as a slave auctioneer, but you have to find a job that does not match your skills, hence the other term for structural unemployment, mismatch unemployment. Also note that the Natural Unemployment rate does not include people who are unemployed because of a lack of spending, e.g. automobile factory workers, computer software programmers, t-shirt manufacturers, etc. That is cyclical unemployment and is typically considered the worst kind of unemployment an economy can have, whereas Frictional Unemployment is seen as good, and Structural Unemployment is seen as necessary for a growing economy.

This seems by far and ahead, a much simpler, and more understandable definition of the natural rate of unemployment, then the esoteric mixed bag of words on the wiki page of this topic. I'm not trying to say that it should be dumbed down to the point that even elementary schoolers can understand what is being said, but at least allow high school juniors and seniors to have an idea of what is going on.

The last thing I have to say on this is more based on a philosophical point of view rather than the specifics of this article it self, so ignore from this point on if you wish.

When writing about a topic as important to society as economics or math or science, wouldn't it make the most sense to make those the most understandable articles out there? To allow information that is vital to the society spread more easily? To educate the masses, in the simplest manner possible, about the most profound of subjects, e.g. evolution, derivatives, the natural rate of unemployment (*cough cough*)? That is my biggest problem with Wikipedia and the esoteric writing that is so rampant on it, it is a self-fulfilling prophecy. You don't see scientific Ph.Ds go to a middle school or high school and get involved with the high level math and concepts involved with their fields when lecturing students do you? No. They understand that the scientific community benefits by being open when talking in public, and being esoteric when talking amongst themselves.

The late Carl Sagan knew this most well, making one of the most popular science series of all time. He understood that in order to increase the knowledge and interest in science for the public at large, he could not talk to them in the language of esoteric science, but he must come at them with everyday examples with profoundly deep examples attached to them. In this way the masses began to understand what science was about, and there is a measured rise in the interest in science as a field after "The Cosmos" ended. So back to my original point, if you want your field, economics, to grow and become a strong field of study, you can't allow it to be summed up and explained by people who feel that explaining in convoluted language to the masses is the best way to go. This only hurts your field of study and distances you from the public. And you wonder why the American people don't trust economists?

P.S I'm a college freshman —Preceding unsigned comment added by Snakehr3 (talk • contribs) 07:37, 29 October 2010 (UTC)

PERHAPS the problem with the term/idea "natural rate of unemployment" is the use of the word 'natural'. As far as I can see, "BASE rate of unemployment" or "TREND rate of unemployment" describe the same phenomenon, without creating any suggestion that there is anything 'natural' about the "natural rate of unemployment". The term 'cyclical unemployment' describes changes in unemployment around a 'base' level (or 'trend' level), and the terms are logically and necessarily interdependent. You can't have a cycle, without having a mid value around which the cycle varies.

I think perhaps it is often overlooked that the idea of cyclical changes in unemployment inherently assumes that at some stages of the economic cycle the unemployment level will be LOWER than the 'steady state' unemployment level. This being the case, and assuming that the original aim of simple Keynesian demand management was to reduce the extremes of an economic cycle, the 'steady state' level of unemployment will always remain unaffected by such policies. When these Keynesian policy tools were used (in the UK) to attempt to tackle the 'structural' element of the 'steady state' unemployment level, intractable inflation (and inflationary expectations) were INJECTED into the economy. 'Injected' was the adjective that James Callaghan chose to use in explaining the decision of the UK Labour Government to abandon their traditional policy tools. It was all a long time ago of course, but I think it is reasonable for a UK citizen to remember well that period, when the UK had to negotiate a bail-out from the International Monetary Fund. 82.32.5.128 (talk) 10:41, 13 April 2018 (UTC)

The economic term "full employment" does not mean "zero unemployment"

I don't think it is original research to point out in the lead that the economic term "full employment" does not mean "zero unemployment". Equally, it is not a published proposition where it would be easy to choose the best source to reference. If the lead is to be easily understood by someone who does not already know the history of the term, it is important to get to the crux of the matter from the very beginning. If a politician uses the term 'full employment', they OUGHT to be clear that it means: "that number of unemployed, which is broadly in line with the 'natural' rate that presently rules. Severe cyclical unemployment may be addressed by Demand-side measures, but the 'natural' rate of unemployment in an economy can ONLY be addressed by Supply-side interventions. Supply-side interventions are HARD, so it is important to be clear that (according to mainstream economic theory) there is absolutely NO macroeconomic demand-side policy tool that can address a high 'natural' rate of unemployment. Perhaps that is why some governments have redefined <unemployment> in order to bring about a statistical reduction in the number of folk who are labelled as unemployed. 82.32.5.128 (talk) 12:31, 13 April 2018 (UTC)