Document Type

Honors Thesis

Publication Date

Spring 5-2018

Abstract

The purpose of this research is to analyze the change in the labor market efficiency from before to after the great recession and its effect on economic output following the recession. Concerns have been raised about the adjustment of the labor market compared to the recovery of other economic indicators. Influenced by the methods of Blanchard and Diamond (1989) and Dixon et al. (2014), the Beveridge curve and matching function are used to estimate and observe changing labor market dynamics through the relationship between unemployment and job vacancies.

This thesis finds that labor markets for both Maine and the United States are less efficient after the recovery period than they were prior to the recession. There is also evidence indicating that in 2015 and 2016 Maine has a more efficient labor market than the United States. Possible reasons for the lower labor market efficiencies are the lower labor force participation, automation, and the distribution of vacancies across industries. Future research will consist of measuring the influence of labor market efficiency as well as applying the Beveridge curve and matching function across all states.

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