A Longer-Term Look at The Beveridge Curve

15:47 EDT - In a properly functioning labor market, the unemployment rate falls as the number of job vacancies increases -- a phenomenon known to economists as the Beveridge Curve. But this recovery has been troubling, with a relatively high rate of job openings since January but stubbornly high unemployment, leading observers to worry about a structural shift in the market's efficiency in matching workers and jobs. A new paper by economists at the New York Fed, looking at 60 years of data, suggests that such worry is premature. Typically, they find, the Beveridge Curve shifts outward during recoveries, as it is now, but that doesn't portend a permanently higher long-term unemployment rate. And the longer the expansion, the more likely that the unemployment rate will fall below where it was during the prior expansion. (lauren.weber@wsj.com)

(END) Dow Jones Newswires
August 25, 2014 15:47 ET (19:47 GMT)