What the natural rate of unemployment is
The natural rate of unemployment (sometimes called NAIRU, the non-accelerating inflation rate of unemployment) is the unemployment level that exists even when an economy is at full employment, arising from normal labor market turnover and skill mismatches rather than a lack of overall demand.
The formula
The natural rate is estimated as frictional unemployment rate + structural unemployment rate. Frictional unemployment reflects people between jobs or entering the workforce, while structural unemployment reflects mismatches between workers’ skills and available jobs. Comparing the natural rate to the actual unemployment rate reveals cyclical unemployment, the portion tied to the business cycle: actual rate minus natural rate.
Economists estimate the natural rate using historical data and models, so real-world figures vary by country and time period. This calculator is for general economics education and planning purposes only.