Dynamics of the Beveridge Curve and Global Crises

Abstract

This research studies the relation between unemployment and vacancies for Chile between 1994I-2012IV with a special focus on the stages of global crises. Looking at the data, we observed that consequently to the Asian financial crisis, Chile showed an outward shift from the Beveridge Curve which indicates an efficiency loss in the matching process between labor supply and demand. On the other hand, the curve moved inwards as a result of the sub-prime crisis, a proof that supports an improvement in the matching process. We examine a series of factors previously used in the literature with the aim to decompose the changes in the unemployment rate and distinguish the factors that explained the changes in the efficiency of the matching process during both crises. The results, point out that the composition of the labor force and the real wage level were the main variables that explained the efficiency changes.

Examining the Shifting Dynamics of the Beveridge Curve in the Turkish Labor Market during Crises

“…To examine the Beveridge curve in the Turkish labor market, it is crucial to carefully select relevant variables that yield economically significant results reflecting the labor market dynamics. Various factors have the potential to contribute to shifts in the Beveridge curve (see Acuna et al 2018;Bonthuis et al 2016;Hobijn and Şahin 2013;Vansteenkiste 2017;Waqas and Awan 2017). Globally, there is a potential measurement problem for the vacancy rate.…”

“…In the last few years, the relationship between BC unemployment and vacancies has become a key organizing principle for understanding the labor markets (Elsby et al 2015). Interestingly, a common tool for describing the state of the labor market and differentiating between structural and cyclical changes is the Beveridge curve (Acuna et al 2018). In the aftermath of the global financial crisis, economies worldwide experienced an exceptional increase in the unemployment rate, coupled with a decline in job vacancies, as noted by Hobijn and Şahin (2013).…”

“…The unemployment inflow rate was initially under pressure to rise due to a large number of new job seekers. Examining the data for Chile, Acuna et al (2018) found that the BC has shifted outward, indicating a loss of efficiency in the labor supply and demand matching mechanism as a result of the Asian financial crisis. By contrast, the sub-prime crisis caused the curve to invert, which is evidence of an improvement in the matching process.…”