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Search, unemployment, and the Beveridge curve: Experimental evidence

Author

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  • Duffy, John
  • Jenkins, Brian C.

Abstract

We report on a laboratory experiment testing the predictions of the Diamond–Mortensen–Pissarides (DMP) search-and-matching model, which is a workhorse, decentralized model of unemployment and the labor market. We focus on the job vacancy posting problem that firms face in the DMP model. We explore the model’s comparative statics predictions concerning variations in the separation rate, the vacancy posting cost, and the firm’s surplus earned per employee. Across all treatments, we find strong evidence for an inverse relationship between vacancies and unemployment, consistent with the Beveridge curve. We also find that the results of our various comparative statics exercises are in-line with the predictions of the theory.

Suggested Citation

  • Duffy, John & Jenkins, Brian C., 2024. "Search, unemployment, and the Beveridge curve: Experimental evidence," Labour Economics, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:labeco:v:87:y:2024:i:c:s0927537124000149
    DOI: 10.1016/j.labeco.2024.102518
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    More about this item

    Keywords

    Beveridge curve; Job search; Matching; Vacancies; Unemployment; Experimental economics;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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