What Message Is The Beveridge Curve Sending?

The Bureau of Labor Statistics writes

"The Beveridge Curve ... plots the job openings rate with respect to the unemployment rate. During an expansion, the job openings rate is high and the unemployment rate is low moving to points along the curve up and to the left. During a contraction, the job openings rate is low and the unemployment rate is high moving to points along the curve down and to the right. A shift in the Beveridge curve can indicate a structural shift in the economy due to industry-based structural mismatch and geography-based structural mismatch. For example, if the job openings rate and the unemployment rate are both high, this could shift the entire curve up and to the right."

These various patterns are apparent if you look at a recent Beveridge curve, which is published each month as part of the press release for the most recent Job Openings and Labor Turnover Survey statistics. This is the figure published in early January, which includes monthly data from December 2000 up through November 2018.

(Click on image to enlarge)

The key point here is that the Beveridge curve seems to have shifted since the start of the economic upswing back in 2009. Starting in 2000, through the recession of 2001, the upswing from 2001 to 2007, and the start of the Great Recession, the data on job openings and unemployment basically moves back and forth along the same line. As the Great Recession deepened, the Beveridge curve stretched out to the far lower right. But then when the economic recovery started in 2009, the Beveridge curve relationship did not retrace the earlier pattern from 2000-2009; instead, it moved out to the right, as shown by the purple line in the figure.

What does this shift in the Beveridge curve relationship mean? In a literal sense, it means that for a certain unemployment rate (on the horizontal axis), there is a higher rate of job openings (on the vertical axis). To put it another way, employers in the years after 2009 seemed more reluctant to fill their job openings, or as economists say, it appeared to be harder for employers to find a match when they listed a job among the workers who were applying for those jobs. The "matching efficiency" of the US labor market had declined.

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