US Beveridge curve

The Beveridge Curve, known as the line that relates unemployment and the job vacancy rates, has shifted upwards since 2010. What this means (and as we can see in the chart below), is that for any level of unemployment rate we now should expect a vacancy rate 0.5% greater than it used to be before the crisis.

What can be read from this move, is that unemployment has a bigger structural component compared with the market that we used to know in the pre-crisis world; i.e. the inefficiency in labor market is now greater given the mismatch between the openings and the people who are out there ready to get hired. From a policy maker perspective, this could mean that monetary policy has done most of the job it could have done, and that tapering may not be as bad as some people might think.