Shifting the Beveridge Curve: What Affects Labor Market Matching?

Abstract

This paper explores conditions and policies that could affect the matching between labor demand and supply. We identify shifts in the Beveridge curves for 12 OECD countries between 2000Q1 and 2013Q4 using three complementary methodologies and analyze the short-run determinants of these shifts by means of limited-dependent variable models. We find that labor force growth as well as employment protection legislation reduce the likelihood of an outward shift in the Beveridge curve,. Our findings also show that the matching process is more difficult the higher the share of employees with intermediate levels of education in the labor force and when long-term unemployment is more pronounced. Policies which could facilitate labor market matching include active labor market policies, such as incentives for start-up and job sharing programs. Passive labor market policies, such as unemployment benefits, as well as labor taxation render matching signficantly more difficult.

Dynamics of the Beveridge Curve and Global Crises

“…As Bova et al [12], in figures 2 and 3 we present the evolution of the relation between unemployment and vacancies in the pre and post periods of both crises. In the first one, we can appreciate that for the period prior to the Asian crisis; the curve was steady with movements along itself which are attributed to cyclical factors.…”

“…Finally, Bova et al [12] motivated by the high persistence of the unemployment level after the sub-prime crisis, explain which are the factors and policies that have caused movements of Beveridge Curve. Using data of 12 OECD countries between 2001 and 2013, they identify that an older workforce and a strict legislation of employment had a negative impact in the matching function.…”

“…Based on methodology used by Bonthuis et al [8] and Bova et al [12], we start with a visual inspection of the trajectory followed by the relation between the vacancies and unemployment. This analysis is complemented using the approach of Bellani et al [3] which uses the following specification:…”

Regional labour markets in Spain: Can flexibility and local democracy reduce inefficiencies?

“…During the crisis, institutional changes were necessary for helping the economy to recover. In facts, appropriate policies can facilitate labour market matching (e.g., Bova, Tovar Jalles, & Kolerus, ). Our findings suggest that the result was a decrease in inefficiency achieving the lowest level in rebound.…”

Mitigating Long-term Unemployment in Europe

“…Many studies (Jackman et al, 1990;Franz, 1987;Johansen, 2004;Arpaia and Turrini, 2014;and ©International Monetary Fund. Not for Redistribution Bova et al, 2016) found a negative relationship between the incidence of LTU and labor market matching efficiency. For example, Arpaia and Turrini (2014) found that high incidence of LTU has been associated with declining matching efficiency in Europe after the GFC.…”