Structural Unemployment

The paper argues that when some states are tight while others remain slack, a policy rule that also reacts to cross-state dispersion in unemployment gaps can deliver better inflation and slack outcomes than a rule based only on the national mean. The takeaway is a policy design point: heterogeneity is a potentially useful state variable for stabilization, not just a distributional detail.

This paper constructs monthly state-level full-employment unemployment rates and shows that persistent regional variation changes how policymakers should interpret full employment, labor-market slack, and national monetary-policy stance.

Using state-level variation, this project studies how unemployment insurance, occupational licensing, minimum wages, and other institutions shape structural unemployment across the United States.