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Working Paper
The Dual Beveridge Curve
The recent behavior of the Beveridge Curve significantly differs from past recessions and is hard to explain with traditional gradual changes in fundamentals. We propose a novel dual vacancy model where we acknowledge that not all vacancies are made equal—when firms post a vacancy they can hire from unemployment or they can poach a worker from another firm. Our dual vacancy model segments the labor market into separate search processes for unemployed and employed workers and provides a better fit to the data than traditional models assuming a homogeneous market. By analyzing labor market ...
Working Paper
What Does the Beveridge Curve Tell Us about the Likelihood of Soft Landings?
Any assessment of the likelihood and characteristics of a soft landing in the labor market should take into account the current state of the labor market and the likely dynamics in the labor market going forward. Modern labor market models centered around the Beveridge curve are a useful tool in this assessment. We use a simple model of the Beveridge curve to investigate what conditions are necessary for a soft landing in the labor market to occur and what the likelihood of these conditions was during the height of the pandemic-period inflation. We find that a soft landing was a plausible ...
Journal Article
Finding a Soft Landing along the Beveridge Curve
As U.S. economic growth slows this year, a key question is whether job openings can fall from historical highs without a substantial rise in unemployment. Analyzing the current Beveridge curve relationship between unemployment and job openings presents a meaningful possibility that labor market pressures can ease and achieve a “soft landing” with only a limited increase in unemployment. This view is supported by high rates of job matching in the U.S. labor market in 2022, despite ongoing employment reallocation across industries.
Journal Article
Understanding Post-Pandemic Surprises in Inflation and the Labor Market
Since the COVID-19 pandemic, the United States has experienced sharply rising then falling inflation alongside persistent labor market imbalances. This Economic Commentary interprets these macroeconomic dynamics, as represented by the Beveridge and Phillips curves, through the lens of a macroeconomic model. It uses the structure of the model to rationalize the debate about whether the US economy can expect a hard or soft landing. The model is surprised by the resiliency of the labor market as the US economy experienced disinflation. We suggest that the model’s limited ability to capture ...
Working Paper
The Dual Beveridge Curve
When firms decide to post a vacancy they can hire from the pool of unemployed workers or they can poach a worker from another firm. In this paper we show that if there are two different matching processes, one for unemployed workers and another one for job-to-job transitions, then implications for the Beveridge curve are potentially very different, influencing the effects of monetary policy on unemployment. We show that over the years the hiring process and how job postings are used as an input into this process has changed dramatically.
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.
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.
Working Paper
The Dual Beveridge Curve
The recent behavior of the Beveridge Curve has been puzzling, significantly differs from past recessions, and is hard to explain with traditional gradual changes in fundamentals. We propose a novel dual-vacancy model that rationalizes this recent puzzling behavior, by acknowledging that not all vacancies are made equal—when firms post a vacancy they can fill it with an unemployed worker or they can fill it with an already employed worker—and by assuming that there are two separate search and matching processes, one for unemployed workers and another for the employed workers. By analyzing ...
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 ...
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 ...