The Dual Beveridge Curve

RePEc Short ID: pre260
ORCID iD: 0000-0002-1481-051X

Cheremukhin, Anton A.; Restrepo-Echavarria, Paulina

doi:10.20955/wp.2022.021

Working Paper Revision

The Dual Beveridge Curve

Abstract: The recent behavior of the U.S. Beveridge curve — its outward shift and changing slope — has puzzled economists and is difficult to reconcile with standard explanations based on gradual structural change or declining matching efficiency. We propose a dual-vacancy model in which firms post two distinct types of vacancies: those targeting unemployed workers and those designed to hire already employed workers through poaching. These two types of vacancies operate in segmented sub-markets with separate matching processes. Using U.S. labor market data from 1978 to 2024, we estimate the evolution of both types of vacancies, and show that the share of poaching vacancies has risen significantly since the mid-2010s. This increase is closely linked to an upward trend in their estimated profit-cost ratio. When we adjust the Beveridge curve to include only non-poaching vacancies, its recent puzzling behavior disappears. We estimate the model using a flexible Bayesian framework across multiple data constructions and sectors, and find consistent evidence supporting the dual-vacancy mechanism.

JEL Classification: J23; J63; J64; E52;

https://doi.org/10.20955/wp.2022.021