On the Stability of the German Beveridge Curve: A Spatial Econometric Perspective
In this paper, the framework of the aggregated Beveridge curve is used to investigate the effectiveness of the job matching process using German regional labour market data. For a fixed matching technology, the Beveridge curve postulates a negative relationship between the unemployment rate and the rate of vacancies, which is efficiently estimated using spatial econometric techniques. The eigenfunction decomposition approach suggested by Griffith (2000, 2003) is the workhorse to identify spatial and nonspatial components. As the significance of the spatial pattern might vary over time, inference is conducted on the base of a spatial SUR model. Shifts of the Beveridge curve will affect its position, and time series estimates on this parameter are obtained. In contrast to findings for the US and the UK, the results provide serious indication that the degree of job mismatch has increased over the last decade. Although the outward shift of the Beveridge curve can be explained by structural factors such as the evolution of long term unemployment, it is also affected by business cycle fluctuations. The role of cyclical factors challenges the stability property of the curve. The relationship might be inappropriate to investigate policy measures directed to improve the mismatch, such as labour market reforms.
|Date of creation:||Apr 2006|
|Date of revision:|
|Publication status:||published in: Annals of Regional Science, 2008, 42, 967-986|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Christopher Pissarides, 2003.
"Unemployment in Britain: a European success story,"
LSE Research Online Documents on Economics
2304, London School of Economics and Political Science, LSE Library.
- 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.
- Wall, Howard & Zoega, Gylfi, 1997. "The British Beveridge Curve: A Tale of Ten Regions," CEPR Discussion Papers 1771, C.E.P.R. Discussion Papers.
- Howard J. Wall & Gylfi Zoega, 2001. "The British Beveridge curve: a tale of ten regions," Working Papers 2001-007, Federal Reserve Bank of St. Louis.
- Christopher A. Pissarides, 1992. "Loss of Skill During Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 107(4), pages 1371-1391.
- Barbara Petrongolo & Christopher A. Pissarides, 2000.
"Looking Into the Black Box: A Survey of the Matching Function,"
CEP Discussion Papers
dp0470, Centre for Economic Performance, LSE.
- Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
- Petrongolo, Barbara & Pissarides, Christopher, 2000. "Looking Into The Black Box: A Survey Of The Matching Function," CEPR Discussion Papers 2409, C.E.P.R. Discussion Papers.
- Barbara Petrongolo & Christopher Pissarides, 2000. "Looking into the black box: a survey of the matching function," LSE Research Online Documents on Economics 2122, London School of Economics and Political Science, LSE Library.
- Robert J. Hodrick & Edward Prescott, 1981.
"Post-War U.S. Business Cycles: An Empirical Investigation,"
451, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Hodrick, Robert J & Prescott, Edward C, 1997. "Postwar U.S. Business Cycles: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 1-16, February.
- A. Bhargava & L. Franzini & W. Narendranathan, 1982. "Serial Correlation and the Fixed Effects Model," Review of Economic Studies, Oxford University Press, vol. 49(4), pages 533-549.
- Olivier Jean Blanchard & Peter Diamond, 1990.
"Ranking, Unemployment Duration, and Wages,"
NBER Working Papers
3387, National Bureau of Economic Research, Inc.
- Nicolaas Groenewold, 2003. "Long-Run Shifts of the Beveridge Curve and the Frictional Unemployment Rate in Australia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 6(1), pages 65-82, March.
- 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, vol. 58(231), pages 279-97, August.
- 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.
- Nickell, Stephen & Bell, Brian, 1995. "The Collapse in Demand for the Unskilled and Unemployment across the OECD," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 40-62, Spring.
- Priewe, Jan, 1993. "Privatisation of the Industrial Sector: The Function and Activities of the Treuhandanstalt," Cambridge Journal of Economics, Oxford University Press, vol. 17(3), pages 333-48, September.
- Pissarides, Christopher A, 1985. "Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages," American Economic Review, American Economic Association, vol. 75(4), pages 676-90, September.
- Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 339-376.
- Richard Archambault & Mario Fortin, 2001. "The Beveridge curve and unemployment fluctuations in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 34(1), pages 58-81, February.
- Lei Lei Song & Elizabeth Webster, 2003.
"How Segmented are Skilled and Unskilled Labour Markets: the Case of Beveridge Curves,"
Australian Economic Papers,
Wiley Blackwell, vol. 42(3), pages 332-345, 09.
- Elizabeth Webster & Lei Lei Song, 2001. "How Segmented Are Skilled and Unskilled Labour Markets: The Case of Beveridge Curves," Melbourne Institute Working Paper Series wp2001n14, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
- Budd, Alan & Levine, Paul & Smith, Peter, 1988. "Unemployment, Vacancies and the Long-term Unemployed," Economic Journal, Royal Economic Society, vol. 98(393), pages 1071-91, December.
- 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.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp2099. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.