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Unemployment vs. help-wanted.

The rate at which jobs are found (and unemployment thus reduced) depends on how many workers are looking for jobs and how many vacant jobs are available, according to the April 1999 Economic Trends newsletter published by the Federal Reserve Bank of Chicago. "The more vacancies there are (holding other factors constant), the lower the unemployment rate."

The graphic device used to illustrate this principle is the "Beveridge curve," named after the British economist who first established this empirical relationship. The Beveridge curve relationship, Economic Trends goes on to say, appears as a downward sloping line over relatively short time periods. Over longer periods, however, it has been unstable, both in the United States and elsewhere. Based on graphs of the unemployment rate against the Conference Board's help-wanted advertising index (a rough proxy for vacancies), Economic Trends says:

"In the 1950s, for example, both unemployment and vacancies were low; nevertheless, as vacancies decreased, unemployment rose. Compare this to the 1980s, when both vacancies and the unemployment rate were much higher. Again, as vacancies declined, unemployment rose. The Beveridge curve shifted out significantly."

Since the 1980s, Economic Trends detects a new shift in the curve, this time back toward the origin of the graph. One implication of this is that a given level of "vacancies" has recently been consistent with a lower level of unemployment than had been the case in the immediate past decade.
COPYRIGHT 1999 U.S. Bureau of Labor Statistics
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1999 Gale, Cengage Learning. All rights reserved.

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Publication:Monthly Labor Review
Article Type:Brief Article
Date:May 1, 1999
Words:234
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