Revisiting the Beveridge Curve: Why Has It Shifted so Dramatically?




The Beveridge curve is one of the most robust regularities in economics, as it holds in different time periods, across countries2 and at the aggregate and disaggregated (or sectoral) level. When shown in a graph, it plots the job-vacancy rate (on the x-axis) against the unemployment rate (on the y-axis). The curve generally slopes downward, indicating that vacancies tend to be higher when the unemployment rate is lower, and vice versa.

Figure 1 shows the Beveridge curve for the monthly data collected in the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) from December 2000 until August 2021 (the most recent data point). Each dot represents a combination of the unemployment rate and the job opening rate.3 The sample is divided into four distinct periods, which correspond to the period up to the financial crisis, the ensuing recession and recovery up until 2017, and the period between January 2018 and March 2020, during which the unemployment rate was persistently below 4.5 percent. The fourth period — April 2020 through August 2021 — captures the COVID-19 months.

Author(s): Thomas A. Lubik

Publication Date: October 2021

Publication Site: Federal Reserve Bank of Richmond