What lies behind the natural rate of unemployment? In this paper, I introduce a monthly estimation of the natural rate of unemployment (u*) at the state level across the United States from January 2001 to December 2023 and employ this measure to explore the underlying economic determinants of u*. These data reveal significant variation in u* by state. Utilizing the variation between and within states, I examine the role of sectoral shocks, labor market regulations, and broad economic activity in shaping the natural rate of unemployment. Additionally, I explore the diffusion of shocks to key determinants of u*. These findings not only provide a nuanced understanding of the structural underpinnings of unemployment but also offer policymakers a more accurate framework for analyzing unemployment dynamics.


Pusateri, Nicholas R. 2024. “Unveiling u*: A State-level Approach” Working Paper. URL: https://nicpusateri.com/unveiling .

  title={Unveiling $u^\ast$: A State-level Approach},
  author={Pusateri, Nicholas R.},
  journal={Working Paper},