Working Paper: NBER ID: w18761
Authors: Peter A. Diamond
Abstract: Whenever unemployment stays high for an extended period, it is common to see analyses, statements, and rebuttals about the extent to which the high unemployment is structural, not cyclical. This essay views the Beveridge Curve pattern of unemployment and vacancy rates and the related matching function as proxies for the functioning of the labor market and explores issues in that proxy relationship that complicate such analyses. Also discussed is the concept of mismatch.
Keywords: No keywords provided
JEL Codes: E24; E32; E6; J23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cyclical factors (E32) | high unemployment rates during the Great Recession (J64) |
| Beveridge curve shifts outward (J69) | structural change in the labor market (J29) |
| increased structural unemployment (J64) | decline in efficiency of the matching function (D61) |
| demographic trends and technology (J11) | confound causal relationships (C90) |