What is the term for the unemployment rate that exists when the economy is at full employment, including frictional and structural factors?

The unemployment rate that exists when the economy is at full employment, including frictional and structural unemployment, is the natural rate of unemployment.

The concept explains why full employment does not mean that every worker has a job at every moment. Frictional unemployment occurs while people move between jobs or search for a suitable position. Structural unemployment results from longer-lasting mismatches between workers' skills or locations and the jobs available. Neither type necessarily reflects a weak economy.

Milton Friedman and Edmund Phelps developed influential versions of the natural-rate idea in the 1960s. They argued that demand-management policies could temporarily push unemployment below its natural rate, but that the result would eventually be rising inflation rather than permanently higher employment. The related term NAIRU—non-accelerating inflation rate of unemployment—is often used in similar discussions, although economists distinguish the concepts in some contexts. The natural rate is not fixed: labor-market institutions, demographics, technology, training, and job-matching efficiency can change it over time.