Panel Data Analysis of the Beveridge Curve: Is There a Macroeconomic Relation between the Rate of Unemployment and the Vacancy Rate?

This study investigates whether the Beveridge curve--the relation between vacancy and unemployment rate--is helpful for the quantification of structural unemployment. Since aggregate time series are too short to test detailed hypotheses about the Beveridge curve, the author assembles a panel of nine regions in West Germany. Analyses of these data produce little support for a structural macroeconomic interpretation of the Beveridge curve. The observed shifts of the Beveridge curve are too sudden to be explained by structural changes; there is evidence for aggregation bias; and variables associated with structural unemployment do not substitute for the explanatory power of dummy variables for the observed shifts while cyclical variables do so.