Cyclical Unemployment, Structural Unemployment
Whenever unemployment stays high for an extended period, it is common to see analyses, statements, and rebuttals about the extent to which the high unemployment is structural, not cyclical. This essay views the Beveridge Curve pattern of unemployment and vacancy rates and the related matching function as proxies for the functioning of the labor market and explores issues in that proxy relationship that complicate such analyses. Also discussed is the concept of mismatch.
This paper was presented as the Mundell-Fleming Lecture at the Thirteenth Jacques Polak Annual Research Conference at the International Monetary Fund in Washington, D. C., held November 8-9, 2012. The author thanks Gadi Barlevy, Olivier Blanchard, Steven Davis, John Haltiwanger, Bart Hobijn, Marianna Kudlyak, Giuseppe Moscarini, Peter Orszag, Jim Poterba, Sarah Bloom Raskin, Robert Triest, Rob Valletta, and participants for their comments, as well as James Fogel and Caroline Shinkle for research assistance. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Peter Diamond, 2013. "Cyclical Unemployment, Structural Unemployment," IMF Economic Review, Palgrave Macmillan, vol. 61(3), pages 410-455, August. citation courtesy of