A decrease in matching efficiency
A) can never happen.
B) is due to a change in the productivity of firms.
C) is not related to sectoral shocks.
D) can explain the shift in the Beveridge curve.

Question

Quizplus · Accepted Answer

A decrease in matching efficiency is defined as a decline in the ease with which workers and firms can find and fill job vacancies. This typically leads to an upward shift in the Beveridge curve, which shows the relationship between the job vacancy rate and the unemployment rate. Sectoral shocks, such as changes in the demand for specific types of labor, can certainly contribute to a decrease in matching efficiency. However, the decline can also be due to other factors such as changes in the productivity of firms or a tightening of labor market regulations.

A Decrease in Matching Efficiency