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Policies to lower the Natural Rate of Unemployment

Geoff Riley

16th May 2026

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The Natural Rate of Unemployment (NRU) comprises frictional and structural unemployment at market equilibrium.

Frictional unemployment stems from search frictions and information asymmetries where workers and employers cannot instantly match. Remedial policies include digital job portals, work coaches, in-work tax incentives, relocation subsidies, and benefit conditionality.

Structural unemployment is a deep-rooted, long-term mismatch caused by occupational and geographical immobility. It is addressed via apprenticeship and retraining subsidies, housing market reforms, and transport infrastructure spending.

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Geoff Riley

Geoff Riley FRSA has been teaching Economics for nearly forty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD and Revision conferences in the UK and overseas.

@tutor2uGeoff

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