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The Beveridge Curve, Matching, and Labour Market Flows: A Reinterpretation

Nils Gottfries and Karolina Stadin

Oxford Bulletin of Economics and Statistics, 2025, vol. 87, issue 5, 1025-1044

Abstract: A standard theory of the Beveridge curve is based on the matching function: when unemployment is high, vacancies are filled quickly, so fewer vacancies are needed to balance the inflow into unemployment. Estimating matching functions on panel data, we find no (or very weak) evidence that vacancies are filled quickly when unemployment is high. A model with on‐the‐job search can explain the Beveridge curve when vacancies are filled at a constant rate: when unemployment is high, unemployed job seekers fill a larger share of the vacancies, so fewer vacancies are needed to balance the inflow into unemployment.

Date: 2025
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https://doi.org/10.1111/obes.12676

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Oxford Bulletin of Economics and Statistics is currently edited by Christopher Adam, Anindya Banerjee, Christopher Bowdler, David Hendry, Adriaan Kalwij, John Knight and Jonathan Temple

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