Must-Read: Nick Bunker: Shifting Implications of the Beveridge Curve

Must-Read: Nick Bunker: Shifting Implications of the Beveridge Curve: “Sketching out the Beveridge Curve… confirms this notion that most of the shift…

…is driven by long-term unemployment…. Kory Kroft [et al.]… posits… [this] is because many unemployed workers who otherwise would drop out of the labor force have stayed in due to extended unemployment insurance…. There’s also evidence that the job-openings rate portrays employers’ search for workers as higher than it actually is…. Davis… Faberman… Haltiwanger… finds a decline in ‘recruiting intensity.’… But… the JOLTS database only goes back to December 2000…. If we think there might be a structural shift in the labor market, then we should look at data that covers a much longer period…. Diamond… and… Şahin of the Federal Reserve Bank of New York did. They constructed a data set that spans back to 1951. They show that the Beveridge Curve has shifted out several times over the past six decades, but these shifts weren’t indicative of major structural changes in the labor market or a rise in structural unemployment…. Shifts in the Beveridge Curve should be interpreted with caution…