THE RELATIONSHIP BETWEEN UNEMPLOYMENT AND UNFILLED VACANCIES IN GREAT BRITAIN: AN EXTENDED JOB-SEARCH, LABOUR TURNOVER VIEW

This paper develops a model of the equilibrium unemploymentvacancy relationship, drawing upon concepts in the job searchlabour turnover literature, and uses that model to explain recent shifts in the uv curve for Great Britain. The analysis involves two stages: the estimation of a dynamic employment adjustment equation, and then the solution of the estimated form for the implicit, equilibrium uv relationship at different points in time. In this approach it is possible to attribute shifts in the uv curve to various exogenous factors such as the movement in real wages relative to productivity, external competitiveness, mismatching between jobs and workers, and the replacement ratio.