Whether our current, relatively low unemployment rates
can be sustained without increasing inflation has been a point
of contention among economists, financial market analysts, and
policymakers. Arguments over trade-offs between unemployment
and inflation, however, too quickly gloss over the causes of our
falling unemployment. The cause seems relatively straightforward:
a sustained upturn in the business cycle. But this simple explanation
overlooks another potent factor: the rising rate of labor force
participation.