National Retraining Program
The question
Assume the economy of Ashmoor is operating at its natural rate of unemployment with stable, fully anticipated inflation. Ashmoor funds a large retraining program, and independent evaluations find that it successfully teaches long-term unemployed workers the specific skills that the country's unfilled job openings require. Firms' per-unit production costs and the inflation rate that workers and firms expect are both unchanged. Show the long-run effect of this change in the Phillips curve model. Show the effect on the Phillips Curve graph.
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National Retraining Program: the worked answer
On the Phillips Curve graph, LRPC shifts left.
Why LRPC shifts left
These workers were unemployed because their skills did not match the openings employers were trying to fill, which is structural unemployment. Retraining that gives them the skills those openings actually require reduces structural unemployment, and structural unemployment is a component of the natural rate, so the natural rate falls and the vertical long-run Phillips curve moves left. Because per-unit costs and expected inflation are unchanged, the short-run curve travels with the lower natural rate at the same expected inflation rather than shifting relative to it.
What happens to the equilibrium
The economy can now sustain a permanently lower unemployment rate with no change in the inflation rate.
The mistake students make on this one
Students frequently shift the SRPC down and to the left instead, because more people working sounds like the good-news corner of this graph. Retraining changes who is able to fill openings that already exist, which is the structural piece of the natural rate, so the vertical curve is the one that moves.
On exam day
Keep two lists ready: retraining, better job-search technology, and relocation aid lower the natural rate; longer benefits, permanent skills mismatch, and more first-time job seekers raise it. Anything on either list means you move the LRPC.
How this is graded
The checker reads every curve's position before and after your answer. You are marked correct only when LRPC shifts left and every other curve on the Phillips Curve graph stays where it started — the same standard an AP reader applies to a drawn graph: the right shift, and nothing extra. There is no AI involved; the rubric is the geometry.
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