An increase in the level of structural unemployment will shift the long-run Phillips curve.

Question

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An increase in the level of structural unemployment will shift the long-run Phillips curve to the right, meaning that a higher level of unemployment will be associated with the same level of inflation. This is because structural unemployment is caused by a mismatch between the skills possessed by workers and the skills needed by employers, and cannot be addressed by monetary policy alone. As a result, policymakers may need to pursue other measures, such as education and training programs, to reduce the level of structural unemployment and shift the long-run Phillips curve back to the left.

An Increase in the Level of Structural Unemployment Will Shift