What’s Going on Behind the Euro Area Beveridge Curve(s)?

Abstract

Information on all of the papers published in the ECB Working Paper Series can be found on the ECB's website, http://www.ecb. europa.eu/pub/scientific/wps/date/html/index.en.html 2012 Structural Issues Report "Euro area labour markets and the crisis'' This paper contains research underlying the 2012 Structural Issues Report "Euro area labour markets and the crisis'', which was prepared by a Task Force of the Monetary Policy Committee of the European System of Central Banks. The Task Force was chaired by Robert Anderton (ECB). Mario Izquierdo (Banco de España) acted as Secretary. The Task Force consisted of experts from the ECB as well as the National Central Banks of the euro area countries. The main objectives of the Report was to shed light on developments in euro area labour markets during the crisis, including the notable heterogeneity across the euro area countries, as well as the mediumterm consequences of these developments, along with the policy implications.The refereeing process of this paper has been co-ordinated by the Chairman and Secretary of the Task Force. AcknowledgementsThis paper was the result of background research for the Structural Issues Report 2012 "Euro area labour markets and the crisis". The opinions expressed herein are those of the authors, and do not necessarily reflect the views of the ECB, the Bank of Finland or the Eurosystem. We thank Bob Anderton, Mario Izquierdo Peinado, Mika Kuismanen, Jennifer Smith, Rob Valletta, the anonymous referee, participants of the ESCB Structural Issues Report 2012 Taskforce, the Finnish Economic Association XXXIV Annual Meeting and the 9th ECB/CEPR Labour Market Workshop "Labour market policies and the crisis", for very helpful comments and discussions. All errors are our responsibility.

Baltic Cluster Report: Selected Issues

“…Movements of job vacancies and the unemployment rate since the crisis were therefore consistent with short-term cyclical shocks in the labor market while structural unemployment has remained elevated but broadly unchanged. These results contrast with the findings of Bonthuis et al (2013) who find that Beveridge curve slopes remained unchanged since the crisis in the Euro area, however, outward shifts in the curve were significant (except in Germany where an inward shift was found). Fourth, the Okun relationship, which relates unemployment and output dynamics, has been relatively stable since the crisis.…”

“…We apply this framework to the Baltics by estimating country-specific Beveridge curves using the new data compiled by the European Commission on labor shortages in the manufacturing sector. We follow the recent contribution by Bonthuis et al (2013) applied to euro area countries. Since official data on job vacancy developments suffer from differences in national definitions and lack of availability over longer horizons, we consider the longer European Commission series of employers' perceptions of labor shortages in manufacturing.…”

“…The framework consists of estimating country-specific Beveridge curves, but also a unique Beveridge curve for the Baltic countries as a group using a panel data specification. We specify a Beveridge curve equation by regressing the unemployment rate on labor shortages (used as a proxy for vacancy rate developments), plus a range of shift parameters, following recent studies (Bonthuis et al, 2013). The model estimated for each country is represented as follows:…”

Unemployment and Structural Unemployment in the Baltics

“…We estimate country-specific Beveridge curves for the Baltics using the new data on labor shortage in the manufacturing sector compiled by the European Commission. We follow the recent contribution by Bonthuis et al, (2013) applied to euro area countries. Since official data on job vacancy developments suffer from differences in national definitions and lack of availability over longer horizons, we consider the longer and quarterly available European Commission series of employers' perceptions of labor shortages in manufacturing as an alternative that does not suffer from such definition differences.…”

“…The framework consists of estimating country-specific Beveridge curves, but also a unique Beveridge curve for the Baltic countries as a group using a panel data specification controlling for country-fixed effects. We specify a Beveridge curve equation by regressing the unemployment rate on labor shortages (used as a proxy for vacancy rate developments), plus a range of shift parameters, following recent studies (Bonthuis et al, 2013). The model estimated for each country is represented as follows:…”