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CEP discussion paper
The Beveridge Curve
Eran Yashiv
June 2007
Paper No' CEPDP0807:
Full Paper (pdf)

JEL Classification: E24; E32; J63; J64

Tags: business cycle; job search; matching function; phillips curve; unemployment; vacancies; wage inflation

The Beveridge curve depicts a negative relationship between unemployed workers and job vacancies, a robust finding across countries. The position of the economy on the curve gives an idea as to the state of the labour market. The modern underlying theory is the search and matching model, with workers and firms engaging in costly search leading to random matching. The Beveridge curve depicts the steady state of the model, whereby inflows into unemployment are equal to the outflows from it, generated by matching.

L. Blume and S. N. Durlauf (eds). The New Palgrave Dictionary of Economics, 2nd edition, 2008, in press.