The Beveridge curve and equilibrium unemployment

The Phillips Curve is commonly relied upon to estimate the non-accelerating inflation rate of unemployment (NAIRU). However, the trade-off between inflation and unemployment has become more ambiguous, in part due to the current existence of low inflation and low unemployment. This may render NAIRU estimates less reliable. Thus, in order to gain a more accurate insight into the state of the labor market, I turn to the often-overlooked Beveridge Curve (BC), which depicts the negative relationship between the job vacancy rate (V) and the unemployment rate (U). I contribute to the literature by estimating the BC and the Job Creation Curve (JCC) for the US overall and for each US Census Region (Midwest, Northeast, South, and West) through the use of the Bureau of Labor Statistics' (BLS) Job Openings and Labor Turnover Survey (JOLTS), which covers the period from 2001-2019. Using equilibrium unemployment theory, I am able to identify equilibrium unemployment levels in both the pre- and post-recessionary periods as well as in a scenario where perfect matching efficiency (V=U) is obtained. My findings show that the US and the Midwest had the highest equilibrium unemployment estimates under the prevailing conditions in the post-recessionary period at 5.6%, while the South had the lowest, at 5.2%. Conversely, in a world of perfect matching efficiency (where V = U), the steady-state equilibrium estimates are much lower, ranging from 4.1% to 4.3%.