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Regional Beveridge Curves: A Latent Variable Approach


  • Robert Dixon
  • G. C. Lim
  • John Freebairn


Dixon R., Lim G. C. and Freebairn J. Regional Beveridge curves: a latent variable approach, Regional Studies . This paper applies an unobserved components model to a panel of Australian data to identify the direction and timing of the shifts in regional Beveridge curves. The approach identifies a common factor while allowing for region-specific effects. The common factor that drives the relationship between regional unemployment and vacancy rates is extracted and it is then related to various explanatory variables. The contribution of common shocks to fluctuations in regional unemployment ranges from 18% to 68%. The paper demonstrates the usefulness of a latent variable approach and, in relation to policy, the findings suggest the need for an explicit regional policy to tackle unemployment in Australia.

Suggested Citation

  • Robert Dixon & G. C. Lim & John Freebairn, 2014. "Regional Beveridge Curves: A Latent Variable Approach," Regional Studies, Taylor & Francis Journals, vol. 48(2), pages 254-269, February.
  • Handle: RePEc:taf:regstd:v:48:y:2014:i:2:p:254-269 DOI: 10.1080/00343404.2011.644238

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    References listed on IDEAS

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    Cited by:

    1. Klinger, Sabine & Weber, Enzo, 2014. "Decomposing Beveridge curve dynamics by correlated unobserved components: The impact of labour market reforms in Germany," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100499, Verein für Socialpolitik / German Economic Association.
    2. Carlo Altavilla & Floro Ernesto Caroleo, 2013. "Asymmetric Effects of National-based Active Labour Market Policies," Regional Studies, Taylor & Francis Journals, vol. 47(9), pages 1482-1506, October.
    3. Sabine Klinger & Enzo Weber, 2016. "Decomposing Beveridge Curve Dynamics By Correlated Unobserved Components," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(6), pages 877-894, December.
    4. José Ramón García Martínez & Valeri Sorolla, 2013. "Frictional and Non Frictional Unemployment in Models with Matching Frictions," Working Papers. Serie AD 2013-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    5. Dobrescu, Emilian, 2011. "Sectoral Structure and Economic Growth," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 5-36, September.

    More about this item

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles


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