The Beveridge curve and labour market flows - a reinterpretation

Nils Gottfries () and Karolina Stadin

No 7689, CESifo Working Paper Series from CESifo

Abstract: According to search-matching theory, the Beveridge curve slopes downward because vacancies are filled more quickly when unemployment is high. Using monthly panel data for local labour markets in Sweden we find no (or only weak) evidence that high unemployment makes it easier to fill vacancies. Instead, there are few vacancies when unemployment is high because there is a low inflow of new vacancies. We construct a simple model with on-the-job search and show that it is broadly consistent with the cyclical behaviour of stocks and flows in the labour market also without search frictions. In periods of high unemployment, fewer employed job seekers find new jobs and this leads to a smaller inflow of new vacancies.

Keywords: Beveridge curve; frictional unemployment; matching function; turnover; mismatch; vacancy chain (search for similar items in EconPapers)
JEL-codes: E24 J23 J62 J63 J64 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-dge, nep-lab, nep-mac and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7689

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