What is the "true" unemployment rate?

After recessions and crises, the participation rate (the proportion of the labour force present in the labour market) declines because job seekers give up finding a job, young people have difficulty entering the labour market and certain skills are no longer useful. The rise in the unemployment rate after a recession therefore underestimates the deterioration in the labour market; we therefore calculate what the rise in the unemployment rate would have been (after the subprime crisis, in 2020 with the COVID crisis) if the participation rate had remained on its pre-recession trend. We see that the rise in the unemployment rate would have been: After the subprime crisis, 2.8 percentage points (pp) greater in the United States, 0.9 pp greater in the euro zone and 0 pp greater in France; In early 2021, 2.6 pp greater in the United States, 0.7 pp greater in the euro zone and 1.0 pp greater in France. The "true" unemployment rate is therefore currently 8.8% in the United States, 9.0% in the euro zone and 9.8% in France. The fact that underemployment is greater than that measured by the unemployment rate explains the low level of inflation and the highly expansionary monetary policies.