In the long run, the unemployment rate equals the natural rate of unemployment. The natural rate of unemployment is the lowest unemployment rate while inflation is steady, or the unemployment rate when inflation is not accelerating. Even today, however, many economists disagree on the precise level of the unemployment that should be termed the natural rate of unemployment.
The unemployment natural rate is mostly governed by the economy's supply side, including production capacity and economic institutions. If these institutional elements include permanent the labor market mismatches or real pay rigidities, the natural rate of unemployment may include the involuntary unemployment.
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