Why Has the U.S. Beveridge Curve Shifted Back? New Evidence Using Regional Data

Federal Reserve Bank of San Francisco Working Paper Series No. 2005-25

39 Pages Posted: 24 Jul 2007

See all articles by Robert G. Valletta

Robert G. Valletta

Federal Reserve Bank of San Francisco; IZA Institute of Labor Economics

Date Written: 2005

Abstract

The Beveridge curve depicts the empirical relationship between job vacancies and unemployment, which in turn reflects the underlying efficiency of the job matching process. Previous analyses of the Beveridge curve suggested deterioration in match efficiency during the 1970s and early 1980s, followed by improved match efficiency beginning in the late 1980s. This paper combines aggregate and regional data on job vacancies and unemployment to estimate the U.S. aggregate and regional Beveridge curves, focusing on the period 1976-2005. Using new data on job vacancies from the U.S. Bureau of Labor Statistics, the help-wanted advertising series that formed the basis of past work are modified to form synthetic job vacancy series at the national and regional level. The results suggest that a decline in the dispersion of employment growth across geographic areas contributed to a pronounced inward shift in the Beveridge curve since the late 1980s, reversing the earlier pattern identified by Abraham (1987) and reinforcing findings of favorable labor market trends in the 1990s (e.g., Katz and Krueger 1999).

Keywords: Unemployment, Employment, Labor market

JEL Classification: J63, J64

Suggested Citation

Valletta, Robert G., Why Has the U.S. Beveridge Curve Shifted Back? New Evidence Using Regional Data (2005). Available at SSRN: https://ssrn.com/abstract=892362 or http://dx.doi.org/10.2139/ssrn.892362

Robert G. Valletta (Contact Author)

Federal Reserve Bank of San Francisco ( email )

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IZA Institute of Labor Economics

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Bonn, D-53072
Germany

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