The Natural Rate of Unemployment: Reflections on 25 Years of the Hypothesis

The natural rate of unemployment hypothesis proposed in the 1960s has dominated thought about the causes of, and possible solutions to, unemployment. It asserts that only supply-side measures can achieve sustainable reductions in unemployment. In the 1980s, however, European unemployment rates rose sharply, despite supply-side innovations to economic policy inspired by the hypothesis. These essays reflect retrospectively on the state of the hypothesis and look forward to the emergence of a new wisdom regarding unemployment.

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