State natural unemployment rates range from 3.3 to 7.5 percent

Estimating state-level trend unemployment across all 50 states and the District of Columbia from 1978 to 2025, Ahn and Rudd show that natural rates average 3.3 percent in Nebraska and South Dakota compared to 7.5 percent in Alaska.

The share of long-term structural unemployment ranges from 10 percent in Wyoming to 25 percent in Washington, D.C. Agricultural states in the Midwest exhibit low structural shares due to high worker churn, whereas Rust Belt and Sun Belt states face persistent long-term joblessness.

Demographic shifts explain much of the variance: while population aging and educational attainment reduce trend unemployment, a higher share of youth aged 16 to 24 raises it.

The authors apply their regional natural rate series to state-level Phillips curve models, demonstrating that previous estimates were distorted by unobserved structural variation.

When state-specific unemployment gaps replace raw unemployment rates, the slope of the forward-looking New-Keynesian Phillips curve becomes statistically insignificant.

Previous findings of a flat curve reflected comovement between trend unemployment and disinflation rather than cyclical labor slack.

Instead, traditional backward-looking specifications with lagged unemployment gaps retain strong predictive power.