RESTRUCTURING, THE NAIRU, AND THE PHILLIPS-CURVE

Recent news stories about corporate downsizing have increased concerns that the labor market is being permanently restructured. The press im plicitly, and some economists explicitly, have concluded that this ''r estructuring'' in the labor market has increased the rate of unemploym ent that is consistent with stable inflation. This rate is known as th e NAIRU, the non-accelerating-inflation rate of unemployment, the unem ployment rate below which inflation tends to rise, and above which inf lation tends to fall. This article examines both macroeconomic data an d more disaggregated data in search of evidence that the NAIRU has inc reased. The author finds that neither type of data supports a conclusi on that NAIRU has risen in the past few years. He concludes with a bri ef assessment of the difficulties of estimating the NAIRU.