1. Fluctuations in the unemployment rate from year to year are mostly caused by fluctuations in aggregate demand. Very standard, boring, demand-side monetarist/keynesian view of the business cycle, that predates both monetarism and keynesianism, that most macroeconomists generally accept. An ideal monetary policy that eliminated those fluctuations in aggregate demand could, if it were possible, greatly reduce those fluctuations in unemployment associated with the business cycle.
2. Eliminating those fluctuations in unemployment caused by fluctuations in aggregate demand would also reduce the average level of unemployment. Booms and recessions are not fully symmetric. There is a zero lower bound on the number of people unemployed (the unemployment rate can't go negative), so recessions increase unemployment more than booms reduce unemployment. The economy is not linear, so Jensen's inequality says that reducing the variance will also reduce the mean.
3. But aggregate demand, and fluctuations in unemployment caused by fluctuations in aggregate demand and other shocks, can't be the whole story. We observe some unemployment even in economies where the unemployment rate is fairly stable over time. And attempts to reduce the unemployment rate to anywhere near zero do seem eventually to lead to accelerating inflation. And we observe some unemployment even in booms. There must be some other cause too. What else could cause unemployment, even in an economy where there are no aggregate demand shocks or other aggregate shocks?
4. Search theory is one possibility. But "search" theory should really be called "search/matching" theory. Because without heterogeneity of workers and jobs the search problem would be trivially easy. "You want a job?" "Yes. You want a worker?" "Yes." "Done!". And "search/matching" theory should really be called "wait/matching" theory. Because even if both sides of the labour market have perfect information about the other side -- about who's looking for a job and who's looking for a worker -- there might not be any suitable matches on the market right now, and one or other side might choose to wait until a better match appears on the market.
Kijiji tells me almost for free what used cars are for sale right now, but I might choose to wait, and keep watching Kijiji, until exactly the right Mazda MX6, with the V6 engine and manual transmission, and no rust or stupid body kits, and near to Ottawa etc. etc. appears on Kijiji. And the seller might also choose to wait until exactly the right buyer who wants exactly that sort of Mazda MX6 comes along who will offer a better price than a buyer who really wanted something a bit different. For people who really care about the particular characteristics of a car, the used car market is a very thin market. At any point in time, the number of buyers, or the number of sellers, may be precisely zero.
If anything, the fact that Kijiji is almost free to use encourages both sides to wait longer than they otherwise would. If Kijiji charged me a fee per view, I might be less picky about waiting for the best car. If Kijiji charged sellers a fee per day listed, they might be less picky about waiting for a buyer who really liked their particular car and would pay the higher price. More information, and cheaper information, might increase the unemployment rate and vacancy rate in the market for used cars. It could increase the quality of matches, rather than the speed of matches. It is like an outward shift in the Production Possibility Frontier for matches. Whether we spend it on quality, or speed, or a bit of both, depends on our preferences, and on what happens to the slope of that PPF.
If the only girl you will ever meet is the girl next door, and if you are the only boy she will ever meet, the two of you will either get married as soon as you want, or else exit the marriage market altogether. Full employment, or else out of the labour force altogether, with no unemployment in between. Neither of you will spend any time unmarried and searching for a good match.
Improved search technology need not reduce the unemployment rate, in a matching model. Because it increases the marginal benefits of waiting for a better match. The substitution effect can be bigger or smaller than the income effect.
5. But there are lots of other possibilities too, besides matching theory. Efficiency wage theories, monopoly union theories, etc. Probably no model is the whole truth.