An adjusted Beveridge curve
Cheremukhin and Restrepo-Echavarria in this paper note that job vacancies can be filled either through hiring from the pool of unemployed workers or through poaching workers from another firm. How does that affect the Beveridge curve?
If a job posting leads to a hire from the unemployment pool, it reduces the unemployment rate and increases the employment rate. But if a firm poaches an employee, a worker moves between two positions and neither the employment nor the unemployment rates are affected. As a consequence, these differences have implications for the impact of monetary policy on employment. The authors develop a dual vacancy model where they assume that unemployed workers search for and match only with vacancies intended for unemployed workers, while employed workers match only with the vacancies that are open for workers who are already employed. In that case, the Beveridge curve applies only to the first submarket.
We find that there has been a large disproportionate increase in the number of poaching vacancies starting in the mid-2010s. If we adjust the Beveridge curve by considering only the non-poaching vacancies, the recent puzzling behavior of the Beveridge curve disappears. This result suggests that the slowdown in the demand for workers is likely having a diminished effect on unemployment. This has implications for monetary policy and its effects on unemployment.
The Dual Beveridge Curve
Authors: Anton Cheremukhin, Paulina Restrepo-Echavarria
From: Federal Reserve Bank of Dallas, Federal Reserve Bank of St. Louis
