u* = √uv
Abstract:
Most governm ents are mandated to maintain their economies at full employment. We propos e that the best marker of full employment is the efficient unemployment rat e, ∗u∗, which is the unemployment rate that minimizes the non productive use of labor—both unemployment and recruiting. The nonproductive use of labor is well measured by the number of jobseekers and vacancies,&n bsp;u+v. Through the Beveridge curve, the number of vacan cies is inversely related to the number of jobseekers. With such symmetry, the labor market is efficient when there are as many jobseekers as vacancie s (u=v), too tight when there are more vacancies than job seekers (v>u), and too slack when there are more jobse ekers than vacancies (u>v). Moreover, the efficient un employment rate is the geometric average of the unemployment and vacancy ra tes: u∗=uv. We compute ∗u∗ for t he United States between 1930 and 2022. We find that ∗u∗ ;averages 4.1% over the period, that ∗u∗ is quite stable over time and, for instance, that the US labor market was inefficiently ti ght from the middle of 2021 to the end of 2022.
DTSTAMP:20260615T141147Z DTSTART:20231204T143000Z DTEND:20231204T160000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR