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Working Paper
(Re-)Connecting Inflation and the Labor Market: A Tale of Two Curves
We propose an empirical framework in which shocks to worker reallocation, aggregate activity, and labor supply drive the joint dynamics of labor market outcomes and inflation, and where reallocation shocks take two forms depending on whether they result from quits or from job loss. In order to link our approach with previous theoretical and empirical work, we extend the procedure for estimating a Bayesian sign-restricted VAR so that priors can be directly imposed on the VAR's impact matrix. We find that structural shocks that shift the Beveridge curve have different effects on inflation. ...
The Type of Job Vacancy Matters When Reading the Beveridge Curve
From our Timely Topics podcast series: St. Louis Fed economist Paulina Restrepo-Echavarría discusses her co-authored research on the Beveridge curve and what the indicator can tell us about a soft landing.
Working Paper
Measuring Job-Finding Rates and Matching Efficiency with Heterogeneous Jobseekers
Matching efficiency is the productivity of the process for matching jobseekers to available jobs. Job-finding is the output; vacant jobs and active jobseekers are the inputs. Measurement of matching efficiency follows the same principles as measuring a Hicks-neutral index of productivity of production. We develop a framework for measuring matching productivity when the population of jobseekers is heterogeneous. The efficiency index for each type of jobseeker is the monthly job-finding rate for the type adjusted for the overall tightness of the labor market. We find that overall matching ...
Working Paper
The Dual Beveridge Curve
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 ...
Is a Soft Landing Possible? What the Beveridge Curve Reveals
Adjusting the Beveridge curve to exclude the effect of workers switching jobs suggests that the vacancy rate could fall to pre-pandemic levels without causing the U.S. jobless rate to exceed a 2001-23 average.
How Have U.S. Workers Fared in a Labor Market Reshaped by the Pandemic?
Shocks from the COVID-19 pandemic led to an exceptionally tight U.S. labor market from 2022 to mid-2024. Did all workers benefit from these conditions?
Journal Article
Reducing Inflation along a Nonlinear Phillips Curve
Inflation has climbed since 2021, as the labor market has tightened. Two historical data relationships can account for elevated inflation over the past two years: the Beveridge curve, which relates job vacancies and unemployment rates over the business cycle, and a nonlinear version of the Phillips curve, which links inflation to labor market slack. Combining estimates of the two curves implies that inflation can fall in conjunction with a “soft landing” for the economy if labor market easing is achieved mainly by reducing job vacancies rather than increasing unemployment.
A Hard or Soft Landing? The Answer May Lie in the Beveridge Curve
The traditional Beveridge curve suggests that a sharp rise in unemployment is needed to meaningfully lower the job vacancy rate. But the curve shaped by the pandemic labor market may signal a different result.
Working Paper
The Dual Beveridge Curve
This study introduces a dual vacancy model to explain the recent anomalous behavior of the Beveridge curve. The model proposes that job vacancies are partitioned into two categories, one for the unemployed and the other for job-to-job transitions, and that they function in separate markets. We estimate the monthly numbers of both job vacancy types for the U.S. economy and its subsectors starting from 2000 and find a significant surge in poaching vacancies in the mid-2010s. Our analysis indicates that the dual vacancy model provides a better fit to the data than traditional models. These ...
Does Employers’ Worker Poaching Explain the Beveridge Curve’s Odd Behavior?
Increased worker job-hopping may help explain the odd-shaped post-COVID Beveridge curve and the underlying employment behavior it depicts.