What may have led the NAIRU to disappear?

The NAIRU (non-accelerating inflation rate of unemployment) is the equilibrium unemployment rate when inflation is equal to expected inflation. When the unemployment rate is higher than the NAIRU, inflation is lower than expected inflation; when it is lower than the NAIRU, inflation is higher than expected inflation. In past economic cycles (we look at the United States and the euro zone) , the unemployment rate returned to the level of the NAIRU towards the middle of the expansion period. Today, it seems to remain persistently above the NAIRU. A likely explanation for the disappearance of the NAIRU is that increased labour market flexibility and the decline in wage earners’ bargaining power mean that the “incompressible” unemployment rate, i.e. the rate at which all employable people have a job, has become higher than the NAIRU: the economy reaches incompressible unemployment before it reaches the NAIRU.