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The Shifting Reasons for Beveridge Curve Shifts

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  • Gadi Barlevy
  • R. Jason Faberman
  • Bart Hobijn
  • Ayşegül Şahin

Abstract

We discuss how the relative importance of factors that contribute to movements of the US Beveridge curve has changed from 1959 to 2023. We review these factors in the context of a simple flow analogy used to capture the main insights of search and matching theories of the labor market. Changes in inflow rates, related to demographics, accounted for Beveridge curve shifts between 1959 and 2000. A reduction in matching efficiency, that depressed unemployment outflows, shifted the curve outwards in the wake of the Great Recession. In contrast, the most recent shifts in the Beveridge curve appear driven by changes in the eagerness of workers to switch jobs. Finally, we argue that, while the Beveridge curve is a useful tool for relating unemployment and job openings to inflation, the link between these labor market indicators and inflation depends on whether and why the Beveridge curve shifted. Therefore, a careful examination of the factors underlying movements in the Beveridge curve is essential for drawing policy conclusions from the joint behavior of unemployment and job openings.

Suggested Citation

  • Gadi Barlevy & R. Jason Faberman & Bart Hobijn & Ayşegül Şahin, 2024. "The Shifting Reasons for Beveridge Curve Shifts," Journal of Economic Perspectives, American Economic Association, vol. 38(2), pages 83-106, Spring.
    • Handle: RePEc:aea:jecper:v:38:y:2024:i:2:p:83-106
    DOI: 10.1257/jep.38.2.83
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    1. Henry S. Farber & Robert G. Valletta, 2015. "Do Extended Unemployment Benefits Lengthen Unemployment Spells?: Evidence from Recent Cycles in the U.S. Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 50(4), pages 873-909.
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    3. Crump, Richard K. & Eusepi, Stefano & Giannoni, Marc & Şahin, Ayşegül, 2024. "The unemployment–inflation trade-off revisited: The Phillips curve in COVID times," Journal of Monetary Economics, Elsevier, vol. 145(S).
    4. Steven J. Davis & R. Jason Faberman & John C. Haltiwanger, 2013. "The Establishment-Level Behavior of Vacancies and Hiring," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(2), pages 581-622.
    5. Mary C. Daly & Bart Hobijn & Aysegül Sahin & Robert G. Valletta, 2012. "A Search and Matching Approach to Labor Markets: Did the Natural Rate of Unemployment Rise?," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 3-26, Summer.
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    Cited by:

    1. Taylor, Karl & Bhadury, Soumya & Binner, Jane & Mandal, Anandadeep, 2024. "Business Cycle Turning Points and Local Labour Markets," IZA Discussion Papers 17153, Institute of Labor Economics (IZA).
    2. Crump, Richard K. & Eusepi, Stefano & Giannoni, Marc & Şahin, Ayşegül, 2024. "The unemployment–inflation trade-off revisited: The Phillips curve in COVID times," Journal of Monetary Economics, Elsevier, vol. 145(S).
    3. Pascal Michaillat & Emmanuel Saez, 2024. "Has the Recession Started?," Papers 2408.05856, arXiv.org, revised Sep 2024.
    4. Fortin, Pierre, 2024. "Does immigration help alleviate economy-wide labour shortages?," CLEF Working Paper Series 70, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    5. Régis Barnichon & Adam Hale Shapiro, 2002. "Phillips Meets Beveridge," Working Paper Series 2024-22, Federal Reserve Bank of San Francisco.
    6. Fabrice Collard & Patrick Feve & Alain Guay, 2024. "Risk Scenarios and Macroeconomic Forecasts," Working Papers 24-03, Chair in macroeconomics and forecasting, University of Quebec in Montreal's School of Management, revised May 2024.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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