Definition of Natural Unemployment

It is a type of hypothetical unemployment that prolongs an efficient and healthy economic system when there exists a perfect equilibrium in the labor market. It is considered as full employment but also suggests that the unemployment rate can never be zero as there is always structural, frictional, and cyclical unemployment.


Natural unemployment shows the total no. of people who are unemployed because of the structure of the labor force. It includes the people who were replaced by the machines or also those who don’t have the required skills to get hired.

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