On the Stability of the German Beveridge Curve: A Spatial Econometric Perspective

Reinhold Kosfeld (), Christian Dreger and Hans-Friedrich Eckey ()
Additional contact information
Hans-Friedrich Eckey: University of Kassel

No 2099, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, the framework of the aggregated Beveridge curve is used to investigate the effectiveness of the job matching process using German regional labour market data. For a fixed matching technology, the Beveridge curve postulates a negative relationship between the unemployment rate and the rate of vacancies, which is efficiently estimated using spatial econometric techniques. The eigenfunction decomposition approach suggested by Griffith (2000, 2003) is the workhorse to identify spatial and nonspatial components. As the significance of the spatial pattern might vary over time, inference is conducted on the base of a spatial SUR model. Shifts of the Beveridge curve will affect its position, and time series estimates on this parameter are obtained. In contrast to findings for the US and the UK, the results provide serious indication that the degree of job mismatch has increased over the last decade. Although the outward shift of the Beveridge curve can be explained by structural factors such as the evolution of long term unemployment, it is also affected by business cycle fluctuations. The role of cyclical factors challenges the stability property of the curve. The relationship might be inappropriate to investigate policy measures directed to improve the mismatch, such as labour market reforms.

Keywords: long-term unemployment; business cycle; job mismatch; Beveridge curve; spatial SUR model (search for similar items in EconPapers)
JEL-codes: C21 C23 E24 E32 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2006-04
New Economics Papers: this item is included in nep-eec, nep-geo and nep-mac
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Citations: View citations in EconPapers (4)

Published - published in: Annals of Regional Science, 2008, 42, 967-986

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Related works:
Journal Article: On the stability of the German Beveridge curve: a spatial econometric perspective (2008)
Working Paper: On the Stability of the German Beveridge Curve: A Spatial Econometric Perspective (2006)
Working Paper: On the Stability of the German Beveridge Curve. A Spatial Econometric Perspective (2006)
Working Paper: On the stability of the German Beveridge curve: A spatial econometric perspective (2006)
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