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Unemployment: Lower for Longer?

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Abstract

Unemployment is running near its 50-year low, but inflation has not picked up as expected. This suggests that the unemployment rate consistent with stable inflation has fallen. Combining a conventional Phillips curve tradeoff between unemployment and inflation with a noninflationary unemployment rate that can change over time shows that estimates of this unemployment threshold have declined toward 4% in recent years. One possible reason for this decline is improvements in how job matches are made, reflected in unusually favorable job-finding rates for disadvantaged groups.

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  • Nicolas Petrosky-Nadeau & Robert G. Valletta, 2019. "Unemployment: Lower for Longer?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfel:00201
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    File URL: https://www.frbsf.org/economic-research/files/el2019-21.pdf
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    Cited by:

    1. Leila Bengali & Mary C. Daly & Olivia Lofton & Robert G. Valletta, 2021. "The Economic Status of People with Disabilities and Their Families since the Great Recession," The ANNALS of the American Academy of Political and Social Science, , vol. 695(1), pages 123-142, May.

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