A few months ago I was talking to a reporter and did what has so far turned out to be a bad Beveridge curve take. Thinking it over has been clarifying, and hopefully these Beveridge curve-related takes hold up better. kevinrinz.substack.com/p/revisiting... - ThreadSky

kevinrinz.bsky.social • 110 days ago

A few months ago I was talking to a reporter and did what has so far turned out to be a bad Beveridge curve take. Thinking it over has been clarifying, and hopefully these Beveridge curve-related takes hold up better. https://kevinrinz.substack.com/p/revisiting-a-bad-beveridge-curve

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kevinrinz.bsky.social•110 days ago

The bad take in question was that even though the stability of the quits-based Beveridge curve suggested the easy part of the labor market cool-down was over, job openings could continue to decline without unemployment rising because labor supply among those not finding work could decline.

kevinrinz.bsky.social•110 days ago

Since then, the opening rate has declined nearly 0.5 pp, UR is up less than 0.1 pp, and LFPR is… up. Also quits have fallen past the usually stable BC and the ratio of hires to openings has risen nearly 40%. If you want to be generous, you could say I was right for the wrong reason (ie wrong)

kevinrinz.bsky.social•110 days ago

Both increased vacancy yield and falling quits could enable openings to decline without UR rising much, but quantitatively, the vacancy yield change seems much more important (maybe 80% of the decline in the opening rate since May vs 10%-ish for declining quits)

sarahbana.bsky.social•110 days ago

Really well written, Kevin!

kevinrinz.bsky.social•110 days ago

Thanks!

kevinrinz.bsky.social•110 days ago

So why is the vacancy yield rising? Reduced congestion is one possibility, but research points to only a small correlation between vacancies and the vacancy yield, so even large reductions in vacancies don’t do much here (cc @elizaforsythe.bsky.social) https://docs.iza.org/dp14138.pdf

kevinrinz.bsky.social•110 days ago

On the worker side, there simply hasn’t been a reduction in congestion. One survey puts job search activity at its highest level in just over a decade.

kevinrinz.bsky.social•110 days ago

Another possibility is that firms are bailing on harder-to-fill, more speculative or expansion-oriented openings as they adjust plans for the future, leaving higher-likelihood, core openings as a larger share of openings. Small business survey evidence seems consistent with this dynamic.

danielzhao.bsky.social•110 days ago

I suspect the intensive margin here may matter more given the relative ease of submitting job applications nowadays, though not convinced the resulting congestion from that is any lower either.

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