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

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  • Didem Tuzemen

Abstract

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.

Suggested Citation

  • Didem Tuzemen, 2018. "Job Polarization and the Natural Rate of Unemployment in the United States," Research Working Paper RWP 18-3, Federal Reserve Bank of Kansas City.
    • Handle: RePEc:fip:fedkrw:rwp18-03
    DOI: 10.18651/RWP2018-03
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    More about this item

    Keywords

    Natural Rate of Unemployment; Job Polarization; Labor Demand; Skills; Aging;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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