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Is euro area at full employment ? — A diagnosis from the Beveridge curve

Jean Fernand Leythienne

Economic Analysis and Policy, 2024, vol. 81, issue C, 322-340

Abstract: We propose a simple and robust method to assess if an economy is at full employment, in real time. For this purpose, we first prove that the Beveridge curve is a rectangular hyperbola with one single parameter equal to the square of the mismatch unemployment rate. We apply this equation to obtain a breakdown of the unemployment rate in the euro area and to study how mismatch unemployment and the unemployment gap were impacted by the great recession, the sovereign debt crisis and the COVID-19 pandemics. We finally analyse how disparities in job vacancy rates across countries affect the overall matching at euro area level and derive recommendations for economic policy.

Keywords: Labour market; Beveridge curve; Unemployment; Job vacancy statistics; Macroeconomics; European Union (search for similar items in EconPapers)
JEL-codes: E24 J21 J63 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:81:y:2024:i:c:p:322-340

DOI: 10.1016/j.eap.2023.10.003

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