Not Working: Where Have All the Good Jobs Gone?

by David G. Blanchflower

The task of measuring the NAIRU is further complicated by the general recognition that, plausibly, the NAIRU has changed over the post-war period, perhaps as a consequence of changes in labor markets” (1997a, 195). They further note that “a wide range of values of the NAIRU are consistent with the empirical evidence” (1997a, 237) and, crucially, that the trigger point—when wages and prices start to rise—is poorly estimated. For example, they estimate a NAIRU for the United States of 6.2 percent in 1990 with a 95 percent confidence interval of 5.1 to 7.7 percent. In a different publication the same authors argue that the tightest of the 95 percent confidence intervals for 1994 in the United States is 4.8 to 6.6 percent. They conclude that “it is difficult to estimate the level of unemployment at which the curve predicts is constant rate of inflation” (1997b, 47). Doug Staiger is in the next office to me and is almost always right.