Question

The natural rate of unemployment is the sum of frictional and structural unemployment and does not include cyclical unemployment. Discuss how changes in the economy over the last 20 years have affected either frictional or structural unemployment. Then discuss changes that might be coming in the next 20 years that will affect frictional or structural unemployment.

Answer 1

In last 20 years which has seen maximum cyclical changes like dotcom boom, russian Financial crisis, 2008 great recession, Demonetization blended with newer tax laws and corporate hiribg practices have affected structural unemployment. Changing technology and ways of doing business has seen wide movement in frictional unemployment as employees find it difficult to transition from old ones to new ones.

Next 20 years will see widescake frictional unemployment due to new age technologies and new age corporate rules as well as rising startup culture. Also world is at uncertain pace and lot of ambiguity is seen due to Brexit, NAFTA, US China Trade Wars, Etc coupled with changing business landscape and globalization which can also cause widescale structural unemployment.