The German Beveridge Curve in Light of the Shortness of Skilled Labour

Abstract

The Beveridge curve and its inward or outward shifts are legend in labour market economics. Inward shifts in particular have been shown to reflect, for example, the success of the “Hartz reforms” after 2003-2005, reforms which allegedly have improved the matching efficiency on the German labour market. More recently (not later than since 2020), the German labour market is seriously affected by a “systemic” shortness of skilled labour. The latter occurs when we observe both a rising unemployment rate among the qualified work force _and_ an increasing vacancy rate with regard to skilled labour. In this paper, we develop in three alternative writings the functional form of the Beveridge curve and its corollary, the corresponding econometric estimation equation. This enables us to empirically identify the determinants of the German Beveridge curve (2006-2023). We find evidence for the presumption that recently the German Beveridge curve shifts outwards, most likely as a consequence of the systemic shortness of skilled labour.