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MENTAL MODEL · M4510

Beveridge Curve

Beveridge Curve
BusinessHigh supportLabor Economics
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Updated 2026-08-02

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INTRODUCTION

English translation pending.

CORE DEFINITION

Named after the British economist William Beveridge, the curve plots the vacancy rate against the unemployment rate and normally slopes downward, since strong demand produces many openings and few jobless workers. When both are high at once, the curve shifts outward, indicating that the matching process has broken down through skill, location, or information gaps. Policy then needs retraining and better matching rather than aggregate stimulus.

SCAFFOLDING EFFECT

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- Diagnose structure: when vacancies and unemployment are both high, look for mismatch rather than a demand shortfall - Check the connection: ask whether the failure is in skills, geography, or information flow - Retrain rather than stimulate: fix the matching mechanism before spending money on aggregate demand

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A downward-sloping curve exists because hiring demand moves vacancies and unemployment in opposite directions. If the curve shifts outward, the same unemployment rate coexists with more vacancies, which can only happen if employers and workers fail to find each other. The shift therefore locates the problem in the matching technology, not in the level of demand.

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Beveridge_curveZH · Explicit
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