Beveridgean Unemployment Gap

26 Pages Posted: 4 Dec 2019

See all articles by Pascal Michaillat

Pascal Michaillat

Brown University - Department of Economics

Emmanuel Saez

University of California, Berkeley

Multiple version iconThere are 2 versions of this paper

Date Written: November 2019


This paper measures the unemployment gap (the difference between actual and efficient unemployment rates) using the Beveridge curve (the negative relationship between unemployment and job vacancies). We express the unemployment gap as a function of current unemployment and vacancy rates, and three sufficient statistics: elasticity of the Beveridge curve, recruiting cost, and nonpecuniary value of unemployment. In the United States, we find that the efficient unemployment rate started around 3% in the 1950s, steadily climbed to almost 6% in the 1980s, fell just below 4% in the early 1990s, and remained at that level until 2019. These variations are caused by changes in the level and elasticity of the Beveridge curve. Hence, the US unemployment gap is almost always positive and highly countercyclical---indicating that the labor market tends to be inefficiently slack, especially in slumps.

JEL Classification: E24, E32, J63, J64

Suggested Citation

Michaillat, Pascal and Saez, Emmanuel, Beveridgean Unemployment Gap (November 2019). CEPR Discussion Paper No. DP14132. Available at SSRN:

Pascal Michaillat (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States


Emmanuel Saez

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

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