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The full banana of the labor market

An update on the Beveridge curve

Three and a half years ago, we published a blog post about the Beveridge curve featuring the graph above, which shows how job vacancies and unemployment relate to each other. Each dot represents their values at a particular date. Beveridge’s theory is that these two measures don’t form a kinked line along the axes in a scatter plot, but rather a banana shape. This shape occurs because of delays and frictions in the job market: Vacancies and job seekers take time to intersect, as there may be mismatches in terms of job location and qualifications, for example. The graph above doesn’t show the expected full banana because the available sample period just wasn’t long enough. So, we revisit this idea by updating the graph, shown below. The banana, although not very smooth, is now complete.

How this graph was created: Search for “job openings” and add the series to the graph. From the “Edit Graph” section, add the second series by searching for and adding “civilian unemployment.” From the “Format” tab, choose “Scatter” for graph type. To connect the dots, choose a non-zero line width in the settings of the first series, which is where you can also adjust the size of the dots.

Suggested by Charley Kyd and Christian Zimmermann.

View on FRED, series used in this post: JTSJOR, UNRATE

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