The Remarkable Place of the UV-Curve in Economic Theory

Rodenburg, Peter (2007): The Remarkable Place of the UV-Curve in Economic Theory.

Abstract

The purpose of this paper is to provide an analysis of the impact the UV-curve had on economic theory and to provide an account of the subsequent radical changes in its place and role over the decades since its first appearance in 1958. The paper traces the historical development of the UV-curve and argues that the role of the UV-curve has changed from a measuring device to a graphical representation of full employment to an axiom necessary for matching models of unemployment. This changing role is best understood in the light of a paradigmatic change from Keynesianism to neoclassical search theory.

• Item Type: MPRA Paper
• Language: English
• Keywords: UV-curve, Beveridge-curve, Theories of Unemployment, UV-analysis, Matching models, History of Economic Thought
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B21 - Microeconomics; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J63 - Turnover ; Vacancies ; Layoffs; B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B22 - Macroeconomics; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J64 - Unemployment: Models, Duration, Incidence, and Job Search

References

Abraham, K.G. (1983), Structural/Frictional vs. Deficient Demand Unemployment: Some New Evidence, The American Economic Review, vol. 73, no 4, 708-724

Abraham, K.G. (1983), Structural/Frictional vs. Deficient Demand Unemployment: Reply, The American Economic Review, vol. 76, no 1, 273-276

Abraham, K.G. and Katz, L.F (1986), Cyclical Unemployment: Sectoral Shifts or Aggregate Demand Disturbance, The Journal of Political Economy, vol. 94, no 3, 507-522

Armstrong H. and Taylor, J. (1980), The Measurement of Different Types of Unemployment, in: Creedy, J. (ed.), The Economics of Unemployment in Britain, Buttersworths, London

Berg, D.J. van der (1982), Specification and Estimation of the Unemployment-Vacancy Curve in the Period 1956-1979, De Economist, vol. 130, no. 3, 397-419

Beveridge, W. (1944), Full Employment in a Free Society, George Allen & Unwin Ltd, London

Bewley, R.A. (1979), The Dynamic Behaviour of Unemployment and Unfilled Vacancies in Great Britain: 1958-1971, Applied Economics, vol. 11, 303-308

Blanchard, O.J. and Diamond, P.A.(1989), The Beveridge Curve, Brookings Papers on Economic Activity, vol. 1989, no. 1, 1-60

Bleakley, H. and Fuhrer, J.C. (1997), Shifts in the Beveridge Curve, Job Matching and Labor Market Dynamics, New England Economic Review, sept/oct., 5-19

Borsch-Supan A.H. (1991), Panel Data Analysis of the Beveridge curve: Is there a Macroeconomic Relation between the Rate of Unemployment and the Vacancy Rate?, Economica, vol 58, no 231

Bowden, R.J. (1980), On the Existence and Secular Stability of u-v Loci, Economica, vol 47, no 185, 35-50

Bowers, J.K., Cheshire, P.C. and Webb, A.E. (1970), The Change in the Relation between Unemployment and Earning Increases: A Review of some Possible Explanations, National Institute Economic Review, no.54, 44-63

Bowers, J.K. (1976), Some Notes on Current Unemployment, , in: Worswick, G.D.N. (ed.), The Concept and Measurement of Involuntary Unemployment, George Allen & Unwin Ltd, London

Brown, A.J. (1973), The Framework of Regional Economics in the United Kingdom, National Institute of Economic and Social research, Regional Papers I, Cambridge University Press

Brown, A.J.(1976), UV-analysis, in: Worswick, G.D.N. (ed.), The Concept and Measurement of Involuntary Unemployment, George Allen & Unwin Ltd, London

Burch, S.W. and Fabricant, R.A. (1968), A further Comment on the Behavior of Help-Wanted Advertisement, The Review of Economics and Statistics, vol. 50, no 2, 278-281

Burch, S.W. and Fabricant, R.A. (1971), Cyclical Behaviour of Help-Wanted Index and the Unemployment Rate: A Reply, The Review of Economics and Statistics, vol. 53, no 1, 105-106

Budd, A., Levine, P. and Smith, P. (1987), Long-term Unemployment and the Shifting U-V Curve, A Multi-Country Study, European Economic Review, vol. 31, 296-305

Butters, G.R., (1977), Equilibrium Distributions of sales and Advertising Prices, The Review of Economic Studies, Vol. 44, 465-491

Cheshire, P.C. (1973), Regional Unemployment Differences in Great Britain, National Institute of Economic and Social research, Regional Papers II, Cambridge University Press

Cohen, M.S. and Solow, R.M. (1967), The Behaviour of the Help-Wanted Advertising, The Review of Economics and Statistics, vol. 49, no1, 108-110

Cohen, M.S. and Solow, R.M. (1970), The Behaviour of the Help-Wanted Advertising: A Reply, The Review of Economics and Statistics, vol. 52, no 4, 442-443

Diamond, P.A. (1982), Wage Determination and Efficiency in Search Equilibrium, Review of Economic Studies, Vol. 61, Issue 3, 457-475

Diamond, P.A. (1982), Aggregate Demand Management in Search Equilibrium, Journal of political Economy, Vol. 90, Issue 5, 881-894.

Diamond, P.A. (1984), A Search-Equilibrium Approach to the Micro Foundations of Macroeconomics, MIT Press, Cambridge USA

Dow, J.C.R. and Dicks-Mireaux, L. (1958), The Excess Demand for Labour: A Study of Conditions in Great Britain, 1946-1956, Oxford Economic Papers, vol. 10, 1-33

Dow, J.C.R. (1970), The Management of the British Economy 1945-1960, Cambridge University Press

Evans, G.J. (1975), A Note on Trends in the Relations between Unemployment and Unfilled Vacancies, The Economic Journal, vol. 85, no 337, 135-139

Evans, G.J. (1977), Notes on the Changing Relationship between Registered Unemployment and Notified Vacancies, 1961-1966 and 1966-1971, Economica, vol. 44, no 174, 179-196

Foster, J.I., (1973), The Behaviour of Unemployment and Unfilled Vacancies: Great Britain, 1958–1971; A Comment, The Economic Journal, vol. 83, no 329, 192-201

Foster, J.I., (1974), The Relationship between Unemployment and Vacancies in Great Britain 1958-72: Some further Evidence, in: Laidler, D. and Purdy, D.L. (eds.), Inflation and Labour Markets, Manchester University Press, 164-196

Friedman, M. (1968), The Role of Monetary Policy, American Economic Review, March, no.1

Gregg, P. and Petrongolo, B. (1997), Random or Non-random Matching? Implications for the use of the UV-curve as a measure of Matching Effectiveness, Centre for economic Performance, discussion paper no. 348

Gujarati, D. (1969), Cyclical Behaviour of Help-Wanted Index and the Unemployment Rate, The Review of Economics and Statistics, vol. 51, no 4, 482-484

Gujarati, D. (1972a), The Behaviour of Unemployment and Unfilled Vacancies: Great Britain, 1958–1971, The Economic Journal, vol. 82, no 325, 195-204

Gujarati, D. (1972b), A Reply to Mr. Taylor, The Economic Journal, vol. 82, no 328, 1365-1368

Gujarati, D. (1973), A Reply to Mr. Foster, The Economic Journal, vol. 83, no 329, 201-203

Gordon, A.R. (1966), The Goal of Full Employment, John Wiley & Sons Inc., New York

Hall, R. E. (1979), A Theory of the Natural Unemployment Rate and the Duration of Unemployment, Journal of Monetary Economics, 153-169

Hancock, K.J. (1963), Unemployment in Australia, Summer School of Business Administration, vol. 8, 35-54

Holden, K. and Peel, D.A. (1975), The Determinants of Unemployment and UV Relationship, Applied Economics, vol. 7, 251-255

Holden, K. and Peel, D.A. (1977), The Relationship between Unemployment and Vacancies: Reply Applied Economics, vol. 9, 81-82

Holt, C.C and David, M.H. (1966), The Concept of Job Vacancies in a Dynamic Theory of the Labor Market, in: The Measurement and Interpretation of Job Vacancies: A Conference Report of the National Bureau of Economic Research, NBER, New York, 1966

Hosios, A. J. (1990), On the Efficiency of Matching and Related Models of Search and Unemployment, Review of Economic Studies, vol. 57, 279-298

Hughes, J. J. and Perlman, R. (1984), The Economics of Unemployment, A Comparative Analysis of Britain and the United States, Wheatsheaf Books Ltd

Jackman, R., Layard, R. and Pissarides, C. (1989), On Vacancies, Oxford Bulletin of Economics and Statistics, vol. 51, no 4, 377 - 394

Kalachek, E. and Westebe, R. (1961), Rates of Unemployment in Great Britain and the United States, 1950-1960, The Review of Economics and Statistics, vol. 43, no 4, 340-350

Katz, L. (1988), Some Recent Developments in Labor Economics and Their Implication for Macroeconomics, Journal of Money, Credit and Banking, vol. 20, no. 3

Knight, K.G. and Wilson, R.A. (1974), Labour Hoarding, Employment and Unemployment in British Manufactoring Industry, Applied Economics, vol. 6, 303-310

Kuipers, S.K. and Buddenberg F.H. (1978), Unemployment on Account of Market Imperfections in the Netherlands since the Second World War, De Economist, vol. 126, no. 3, 390-412

Layard, R. and Nickel, S. (1986), Unemployment in Britain, Economica, vol. 53, 121-169

Layard, R., Nickell, S., and Jackman, R. (1991), Unemployment: Macroeconomic Performance and the Labour Market, Oxford University Press

Leeson, R. (2000), A.W.H. Phillips: Collected Works in Contemporary Perspective, Cambridge University Press, Cambridge

Lipsey, R.G. (1965), Structural and Deficient-demand Unemployment Reconsidered, in: McCormick B.J. and Owen Smith E. (eds.), The Labour Market, Hammondsworth, 245-269

Lindbeck, A. (1999), Unemployment – Structural, Institute for International Economic Studies, Stockholm University, seminar paper no. 676

Malinvaud, E. (1994), Diagnosing Unemployment, Cambridge University Press

Muysken J. and Meijers, H.(1988), A Post-Mortem on UV-analysis, Research Memorandum 88-031, University of Maastricht

Muysken, J. (1989), Classification of Unemployment: Analytical and Policy Relevance, De Economist, vol.137, no. 4

Parikh, A. (1977), The Relationship between Unemployment and Vacancies: Comment, Applied Economics, vol. 9, 77-80

Peirce, C.S. (1931–1966), The Collected Papers of Charles S. Peirce, 8 vols., C. Hartshorne, P. Weiss, and A. W. Burks (eds.). Cambridge: Harvard University Press

Petrongolo, B. and Pissarides C.A., (2001), Looking into the Black Box: A Survey of the Matching Function, Journal of Economic Literature, vol. 39, 390-431

Phelps E.S. (1968), Money-Wage Dynamics and Labor-Market Equilibrium, Journal of Political Economy,76, 678-711

Pissarides, C.A. (1979), Job Matching with State Employment Agencies and Random Search, The Economic Journal, Vol. 89, Issue 356, 818-833

Pissarides, C.A. (1985), Short-Run Dynamics of Unemployment, Vacancies, and Real wages, The American Economic Review, Vol. 75, Issue 4, 676-690.

Pissarides, C.A. (1986), Unemployment and Vacancies in Britain, Economic Policy: A European Forum, vol 1 no 3, Cambridge University Press

Pissarides, C.A. (1994), Search Unemployment with On-the-job Search, Review of Economic Studies, Vol. 61, Issue 3, 457-475

Pissarides, C.A. (1999), Equilibrium Unemployment Theory, MIT Press

Reid, F. and Meltz, N.M. (1979), Causes of Shifts in the Unemployment-Vacancies Relationship: An Empirical Analysis for Canada, The Review of Economics and Statistics, vol.61, no 3, 470-475

Solow R.M. (1964), The Nature and Source of Unemployment in the United States, (Wicksell Lecture 1964) Almqvist & Wiksell, Stockholm

Storer, P. (1994), Unemployment Dynamics and Labour Market Tightness: An Empirical Evaluation of Matching Function Models, Journal of Applied Econometrics, vol. 9 no 4, 389-4519

Taylor, J. (1972), The behaviour of Unemployment and Unfilled Vacancies: Great Britain, 1958 – 1971, An Alternative view, The Economic Journal, vol. 82, no 328, 195-204

Thirlwall, A.P. (1969), Types of Unemployment, with Special Reference to “Non-Demand Deficient” Unemployment in the UK, Scottish Journal of Political Economy, vol. 16, no. 1

Wall, H.J. and Zoega G. (2001), The British Beveridge Curve: A Tale of Ten regions, CEPR discussion paper 1771

Warren, R.S. (1977), The behaviour of Unemployment and unfilled Vacancies in Great Britain: a Search-Turnover View, Applied Economics, vol. 9, 237-242

Warren, R.S. (1980), Unemployment and Unfilled Vacancies in U.S. Manufacturing: A Search-Turnover View, The Review of Economics and Statistics, vol. 62, no 2

Webb, A.E. (1974), Unemployment, Vacancies and the Rate of Earnings: A Regional Analysis, National Institute of Economic and Social research, Regional Papers III, Cambridge University Press