Assessing Maximum Employment

Christopher Foote, Shigeru Fujita, Amanda M. Michaud and Joshua Montes
Additional contact information
Shigeru Fujita: https://www.philadelphiafed.org/our-people/shigeru-fujita
Amanda M. Michaud: https://www.minneapolisfed.org/people/amanda-michaud
Joshua Montes: https://www.federalreserve.gov/econres/joshua-k-montes.htm

No 121, Opportunity and Inclusive Growth Institute Working Papers from Federal Reserve Bank of Minneapolis

Abstract: We suggest a core set of indicators for evaluating the position of the labor market relative to maximum employment. The unemployment rate remains the key indicator of the cyclical position of the labor market, as it is time-tested, is highly correlated with other indicators, and has practical measurement advantages. But other indicators can provide complementary evidence to get a fuller picture of the labor market. A joint analysis of job vacancies and unemployment in a Beveridge curve diagram is helpful when structural shocks affect the labor market and when the labor market is very tight, while the employment-to-population ratio is useful late in expansions, when increases in employment tend to arise from higher labor force participation. Additional indicators—including wage growth and worker flows—can complement the core indicators we discuss. We draw on lessons from the Global Financial Crisis and the COVID-19 pandemic to evaluate the effectiveness of various indicators.

Keywords: Wages; Business cycle; Maximum employment; Labor force participation; Job vacancies; Unemployment (search for similar items in EconPapers)
JEL-codes: E24 E32 J23 (search for similar items in EconPapers)
Date: 2025-11-25
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.minneapolisfed.org/institute/working-papers-institute/iwp121.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (https://www.minneapolisfed.org/institute/working-papers-institute/iwp121.pdf [302 Moved Temporarily]--> https://researchdatabase.minneapolisfed.org/downloads/j96020909)

Related works:
Working Paper: Assessing Maximum Employment (2025)
Working Paper: Assessing Maximum Employment (2025)
Working Paper: Assessing Maximum Employment (2025)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmoi:102168

DOI: 10.21034/iwp.121

Access Statistics for this paper

More papers in Opportunity and Inclusive Growth Institute Working Papers from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Kate Hansel ().