Which of the following will most likely cause a decrease the natural rate of unemployment?
A) an increase in the minimum wage
B) an increase in unemployment benefits
C) an increase in experienced workers aged 25 and over as proportion of the labor force
D) an increase in the labor force participation rate of teenagers

Question

Quizplus · Accepted Answer

Increase in experienced workers aged 25 and over as a proportion of the labor force is likely to cause a decrease in the natural rate of unemployment because experienced workers are typically more skilled, productive and have a lower likelihood of being unemployed. This can help to increase the overall efficiency of the labor market and reduce the number of individuals who are unemployed.

The other choices are less likely to cause a decrease in the natural rate of unemployment: 
A) an increase in the minimum wage may actually increase unemployment because it may make it more expensive for firms to hire workers and reduce the demand for labor.
B) an increase in unemployment benefits may also increase unemployment because it may reduce the incentive for individuals to actively search for work.
D) an increase in the labor force participation rate of teenagers may have little effect on the natural rate of unemployment because teenagers are typically in school or have low-paying jobs that may not compete with other workers.

Which of the Following Will Most Likely Cause a Decrease