Labor Supply Shocks and the Beveridge Curve
No 568, WIFO Working Papers from WIFO
The accession of twelve Eastern European countries to the European Union between 2004 and 2007 led to an increase of migrant labour supply in some incumbent countries. By means of a structural VAR with sign restrictions I find that job-related immigration triggered a counter-clockwise outward movement of the Beveridge curve in Austria, a country that was particularly affected due to its geographical exposure and a high wage gap to the accession countries. A regional analysis shows that the prevalence of labour supply shocks abates from east to west. In contrast to standard theory but in line with existing empirical evidence, labour supply shocks are not found to be price dampening, but more likely inflationary. From this it follows that they cannot be properly identified without resorting to some restriction of the unemployment rate.
Keywords: labour supply shocks; Beveridge curve; job-related migration; sign restrictions; structural VAR KP_Berichte_Analysen (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:wfo:wpaper:y:2018:i:568
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