Question

Reducing the natural rate of unemployment requires reducing the rate of job separation and increasing the rate of job finding. Explain at least one policy that will impact each of these aspects of the natural rate of unemployment.

Answer 1

In order to increase the rate of job finding there can be a government employment agency that operates through internet. It can help those who are demanding workers and those who are looking for jobs. In this way it is helpful in matching employers with employees and help in increasing the rate of job finding

In order to reduce the rate of job separation, government can impose strict rules such as paying three month salary for workers who are laid off. Workers can develop labour unions which helps in preventing job losses for union members.