This paper shows that under simple but realistic assumptions, the efficient unemployment rate u* is the geometric average of the unemployment and vacancy rates. In the United States, 1930–2022, u* is stable and averages 4.1%.
This graduate course presents various matching models of the unemployment. It uses them to study unemployment fluctuations, job rationing, unemployment gap, and labor market policies—minimum wage, payroll tax, public employment, and unemployment insurance.
This paper develops a sufficient-statistic formula for the unemployment gap based on the Beveridge curve. The formula features the Beveridge elasticity, unemployment cost, and recruiting cost. In the United States the unemployment gap is generally positive and is countercyclical.