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Economic Brief

September 2014, No. 14-09

Putting the Beveridge Curve Back to Work

Thomas A. Lubik and Karl Rhodes

After the recession of 2007-09, the Beveridge curve seemed to shift significantly outward as the job-vacancy rate increased with no corresponding decrease in the unemployment rate. A new time-varying analysis of the Beveridge curve from the early 1950s through 2011 could lend support to the idea that skill mismatch due to technological change is the most likely driver of the curve's outward shifts, including its most recent movement. This analysis suggests that expansionary monetary policy has done little in recent years to reduce the unemployment rate.

Additional Resources

Barlevy, Gadi, "Evaluating the Role of Labor Market Mismatch in Rising Unemployment," Federal Reserve Bank of Chicago Economic Perspectives, Third Quarter 2011, vol. 35, pp. 82-96.

Benati, Luca, and Thomas A. Lubik, "The Time-Varying Beveridge Curve," Federal Reserve Bank of Richmond Working Paper No. 13-12, August 2013.

Blanchard, Olivier Jean, and Peter Diamond, "The Beveridge Curve," Brookings Papers on Economic Activity, 1989, no. 1, pp. 1-76.

Hobijn, Bart, and Aysegul Sahin, "Beveridge Curve Shifts across Countries since the Great Recession," IMF Economic Review, December 2013, vol. 61, no. 4, pp. 566-600. (A previous version is available online.)

Lubik, Thomas A., "The Shifting and Twisting Beveridge Curve: An Aggregate Perspective," Federal Reserve Bank of Richmond Working Paper No. 13-16, October 2013.

Shimer, Robert, "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, March 2005, vol. 95, no. 1, pp. 25-49. (A working paper version is available online.)

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