Title: The impact of a high influx of foreign workers on the Beveridge curve relation – evidence for Malta from an ARDL approach

Authors: David Baldacchino; Ian P. Cassar

Addresses: Banking Supervision Unit, Malta Financial Services Authority, Birkirkara, Malta ' Department of Economics, Faculty of Economics, Management and Accountancy, University of Malta, Msida, Malta

Abstract: In the context of a buoyant economic expansion and labour market tightening coupled with a huge influx of foreign workers in recent years, an analysis of the matching process between unemployed people and vacant jobs is deemed pivotal. The analysis presented in this study utilises an ARDL model to test for the existence of the Beveridge curve, and for relative shifts in the curve, and limited dependent variable models to test for the underlying factors behind the observed shifts, for the sample period 2002Q1 to 2019Q4. This study establishes that there exists a negatively sloped Beveridge curve, and that there have been two inward shifts in the Beveridge curve, with the first occurring during 2012, and a second, more pronounced shift, occurring during 2016. Both shifts were predominantly driven by the influx of foreign workers, with a positive output gap also having an effect during the second inward shift.

Keywords: Beveridge curve; foreign workers; unemployment rate; vacancy rate; Malta; ARDL.

DOI: 10.1504/IJEBR.2022.126432

International Journal of Economics and Business Research, 2022 Vol.24 No.4, pp.490 - 519

Received: 18 Dec 2020
Accepted: 03 Mar 2021

Published online: 26 Oct 2022 *

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