How to Gauge Maximum Employment

Marios Karabarbounis

Richmond Fed Economic Brief, 2025, vol. 25, issue 32

Abstract: Assessing the level of maximum employment is a key component of conducting monetary policy. The Federal Reserve gauges the health of the labor market based on multiple labor market indicators as well as alternative statistical models. We propose an intuitive methodology to assess if the economy is close to maximum employment based on the historical behavior of the unemployment rate at the tail end of recent expansions.

Keywords: business cycles; employment and labor markets; monetary policy (search for similar items in EconPapers)
Date: 2025
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