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Why has the U.S. Beveridge curve shifted back? new evidence using regional data

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  • Robert G. Valletta

Abstract

The Beveridge curve depicts the empirical relationship between job vacancies and unemployment, which in turn reflects the underlying efficiency of the job matching process. Previous analyses of the Beveridge curve suggested deterioration in match efficiency during the 1970s and early 1980s, followed by improved match efficiency beginning in the late 1980s. This paper combines aggregate and regional data on job vacancies and unemployment to estimate the U.S. aggregate and regional Beveridge curves, focusing on the period 1976-2005. Using new data on job vacancies from the U.S. Bureau of Labor Statistics, the help-wanted advertising series that formed the basis of past work are modified to form synthetic job vacancy series at the national and regional level. The results suggest that a decline in the dispersion of employment growth across geographic areas contributed to a pronounced inward shift in the Beveridge curve since the late 1980s, reversing the earlier pattern identified by Abraham (1987) and reinforcing findings of favorable labor market trends in the 1990s (e.g., Katz and Krueger 1999).

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Paper provided by Federal Reserve Bank of San Francisco in its series Working Paper Series with number 2005-25.

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Date of creation: 2005
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Handle: RePEc:fip:fedfwp:2005-25

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Keywords: Unemployment ; Employment (Economic theory) ; Labor market;

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  1. Wall, Howard J & Zoega, Gylfi, 2002. " The British Beveridge Curve: A Tale of Ten Regions," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(3), pages 261-80, July.
  2. Barbara Petrongolo & Christopher Pissarides, 2000. "Looking into the black box: a survey of the matching function," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 2122, London School of Economics and Political Science, LSE Library.
  3. Hoyt Bleakley & Jeffrey C. Fuhrer, 1997. "Shifts in the Beveridge Curve, job matching, and labor market dynamics," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 3-19.
  4. Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
  5. Jackman, R & Roper, S, 1987. "Structural Unemployment," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(1), pages 9-36, February.
  6. Hansen, Bent, 1970. "Excess Demand, Unemployment, Vacancies, and Wages," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 84(1), pages 1-23, February.
  7. Patricia M. Anderson & Simon M. Burgess, 2000. "Empirical Matching Functions: Estimation and Interpretation Using State-Level Data," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 93-102, February.
  8. Borsch-Supan, Axel H, 1991. "Panel Data Analysis of the Beveridge Curve: Is There a Macroeconomic Relation between the Rate of Unemployment and the Vacancy Rate?," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 58(231), pages 279-97, August.
  9. Katharine G. Abraham, 1987. "Help-Wanted Advertising, Job Vacancies, and Unemployment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1), pages 207-248.
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Cited by:
  1. Mary Daly & Bart Hobijn & Rob Valletta, 2011. "The recent evolution of the natural rate of unemployment," Working Paper Series 2011-05, Federal Reserve Bank of San Francisco.
  2. Richard Dutu & Mark J. Holmes & Brian Silverstone, 2009. "Modelling a Regime-Shifting New Zealand Beveridge Curve," Working Papers in Economics, University of Waikato, Department of Economics 09/13, University of Waikato, Department of Economics.
  3. Edward P. Lazear & James R. Spletzer, 2012. "The United States Labor Market: Status Quo or A New Normal?," Working Papers 12-28, Center for Economic Studies, U.S. Census Bureau.
  4. Bonthuis, Boele & Jarvis, Valerie & Vanhala, Juuso, 2013. "What’s going on behind the euro area Beveridge curve(s)?," Working Paper Series, European Central Bank 1586, European Central Bank.
  5. Bart Hobijn & Aysegül Sahin, 2012. "Beveridge curve shifts across countries since the Great Recession," Working Paper Series 2012-24, Federal Reserve Bank of San Francisco.
  6. Task Force of the Monetary Policy Committee of the European System of Central Banks, 2012. "Euro area labour markets and the crisis," Occasional Paper Series 138, European Central Bank.
  7. Bart Hobijn, 2012. "The industry-occupation mix of U.S. job openings and hires," Working Paper Series 2012-09, Federal Reserve Bank of San Francisco.
  8. Christopher Reicher, 2009. "What Can a New Keynesian Labor Matching Model Match?," Kiel Working Papers 1496, Kiel Institute for the World Economy.
  9. Parantap Basu, 2007. "Understanding Labour Market Frictions: A Tobin’s Q Approach," Money Macro and Finance (MMF) Research Group Conference 2006, Money Macro and Finance Research Group 35, Money Macro and Finance Research Group.
  10. Edward P. Lazear & James R. Spletzer, 2012. "The United States labor market: status quo or a new normal?," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, pages 405-451.

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