Nobel Prize-winning economist Edmund Phelps explains in a Barron’s column why common conceptions of a “natural” rate of unemployment might be wrong.

What explains the paradox of low unemployment despite low inflation (or vice versa)? So far, economists — structuralists as well as diehard Keynesians — have been stumped. The answer must be that the “natural rate” isn’t a constant of nature, like the speed of light. Certainly, it could be moved by structural forces, whether technological or demographic.

It is possible, for example, that demographic trends are slowing wage growth and reducing the natural rate. From the 1970s to the late 2000s, demography was essentially a dormant issue. Now, the baby boomers are retiring from relatively high-wage jobs while young people, who start at relatively low wages, are still pouring into the labor market. This slows the growth of wage rates at a given unemployment rate, leading to lower unemployment at a given rate of wage growth.

More interesting is the possible effect of people’s values and attitudes, and their hopes and fears about the unknown and unknowable, on the natural rate. Here we are entering terra incognita.

For me, a compelling hypothesis is that workers, shaken by the 2008 financial crisis and the deep recession that resulted, have grown afraid to demand promotions or to search for better-paying employers — despite the ease of finding work in the recently tight labor market. A corollary hypothesis is that employers, disturbed by the extremely slow growth of productivity, especially in the past 10 years, have grown leery of granting pay raises — despite the return of demand to pre-crisis proportions.

I have also argued, based on a model of mine, that as the return of a strong dollar by early 2015 threatened to inundate American markets with imports, firms became scared to supply more output at the same price, or else they supplied the same output as before at reduced prices. And they refused to raise employees’ wages.