The type of labor market structure can impact how effective monetary policies are in controlling inflation. When workers are specialized to specific firms, following the Taylor principle for setting interest rates may not keep inflation stable in high trend inflation environments. In contrast, when workers are interchangeable between firms, adhering to the Taylor principle can help maintain stable inflation levels regardless of trend inflation. This suggests that the Federal Reserve's policy changes in the early 1980s may have been successful in stabilizing inflation due to a combination of factors, including a potential decline in trend inflation.