Reducing the natural rate of unemployment. To reduce the natural rate of unemployment, we need to implement supply-side policies, such as: Better education and training to reduce occupational immobilities. Making it easier for workers and firms to relocated, e.g. more flexible housing market and greater supply in areas of high job demand. The rate of unemployment consistent with the natural level is called the natural rate of unemployment. Economists describe an economy at this natural rate as the full employment level of output . To construct a new estimate of the natural rate of unemployment that accounts for these compositional changes in the labor force, I divide the population into 18 distinct groups that combine two sex groups (men and women), three age groups (young, prime-age, and older), and three skill groups (low, middle, and high skill).