Mismatch Redux

It’s encouraging to see Chairman Bernanke continue his pushback against Minneapolis Fed President Narayana Kocherlakota’s theory of structural unemployment in his speech this week:

Research has found that during and immediately after the serious recessions of 1973 to 1975 and 1981 to 1982, the Beveridge curve also shifted outward, but in both cases it shifted back inward during the recovery.  This temporary outward shift during a deep recession may be the result of a particularly sharp increase in layoffs, which raises unemployment quickly, even as vacancies adjust more slowly.”

That’s a point we’ve been making since Kocherlakota first advanced his jobs mismatch theory back in August 2010. ( For more information, see: Mismatching the Facts http://tlrii.typepad.com/theliscioreport/2010/09/mismatching-the-facts.html )