OVER THE PAST thirty years, macroeconomists thinking about aggregate
labor market dynamics have organized their thoughts around two relations,
the Phillips curve and the Beveridge curve. The Beveridge curve,
the relation between unemployment and vacancies, has very much
played second fiddle. We think that emphasis is wrong. The Beveridge
relation comes conceptually first and contains essential information
about the functioning of the labor market and the shocks that affect it.