Which of the following will most likely reduce the natural rate of unemployment?
A) an increase in the minimum wage
B) an increase in unemployment benefits
C) an increase in the proportion of prime-age workers (35-54) as a share of the labor force
D) an increase in the labor force participation rate of teenagers

Question

Quizplus · Accepted Answer

An increase in the proportion of prime-age workers (35-54) as a share of the labor force will most likely reduce the natural rate of unemployment since these individuals are typically the most skilled and experienced workers. This can lead to a more efficient allocation of labor and reduce the mismatch between job openings and job seekers. An increase in the minimum wage or unemployment benefits may actually increase the natural rate of unemployment by discouraging firms from hiring or individuals from actively seeking work. And while an increase in the labor force participation rate of teenagers may provide more opportunities for youth employment, it is unlikely to have a significant impact on the overall natural rate of unemployment.

Which of the Following Will Most Likely Reduce the Natural