What’s Going on Behind the Euro Area Beveridge Curve(s)?

48 Pages Posted: 13 Sep 2013

See all articles by Boele Bonthuis

Boele Bonthuis

University of Amsterdam; Deutsche Bundesbank

Valerie Jarvis

European Central Bank (ECB)

Juuso Vanhala

Bank of Finland

Date Written: August 23, 2013

Abstract

This paper studies unemployment and vacancy developments in the euro area at the aggregate and country level over the Great Recession. The recent crisis has had a heterogeneous impact on euro area labour markets, leading to significant employment losses, especially in some sectors. The extent to which the rise in unemployment and particularly long-term unemployment reflects growing mismatch across euro area labour markets is one of the biggest questions facing euro area labour market policy makers. This paper attempts to shed light on this question by analysing developments in euro area Beveridge curves over the past 20 years, at both the aggregate level and on a disaggregated basis for all euro area countries. Using a simple model of Beveridge curve developments, we test for statistical significance of observed developments and find a significant shift in the euro area Beveridge curve since the onset of the crisis, but considerable heterogeneity at the country level. At the extremes, country level differences include a significant outward shift in the Beveridge curve for Spain and France, an inward shift for Germany, while some euro area countries reveal no significant changes in the responsiveness of unemployment to vacancy developments over the course of the crisis. We include an examination of factors underlying the observed developments across the countries.

Keywords: Beveridge curve, mismatch, unemployment, labour shortages, vacancies

JEL Classification: J62, J63, E24, E32

Suggested Citation

Bonthuis, Boele and Jarvis, Valerie and Vanhala, Juuso, What’s Going on Behind the Euro Area Beveridge Curve(s)? (August 23, 2013). ECB Working Paper No. 1586. Available at SSRN: https://ssrn.com/abstract=2315058

Boele Bonthuis (Contact Author)

University of Amsterdam ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Valerie Jarvis

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Juuso Vanhala

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

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