What is the natural rate of unemployment?

Economics concise explanation: The natural rate of unemployment is the level of unemployment consistent with a stable inflation rate — it includes frictional unemployment (people between jobs) and structural unemployment (mismatch of skills), but not cyclical unemployment caused by business cycles. It represents the economy’s long-run sustainable unemployment rate; estimates vary by country and time depending on labor market rigidities and policies.

Policy implication: attempts to push unemployment below the natural rate often increase inflation (according to the Phillips curve framework). Economists estimate the natural rate using models and labor market data — it’s not directly observable.