<p>Adopting your notation, the vacancy rate at any given time is defined as $A/Q$. There is no mechanical relationship between the unemployment rate $U/Q$ and vacancy rate (A/Q).</p>

<p>They are negatively related because when vacancy rate is high, it means there are many unfilled job openings, and they are unfilled probably because most people already have a job, thus lower unemployment rate. And vice versa.</p>

CC BY-SA 3.0
2016-11-02T04:09:22.257Z
2016-11-02T04:09:22.257Z
Paul
<p>The number of vacancies does not change with U. It is the proportion that will change. In other words A will not change because U increases, but the ratio will go up.</p>

CC BY-SA 3.0
2016-11-01T23:45:42.487Z
2016-11-01T23:45:42.487Z
MHall
<p>Why is this the case?</p>

<p>Since Vacancy rate is defined as following,</p>

<p>let $A,Q,U$ denote number of vacancies in the economy, labor force, unemployed respectively.</p>

<p>$$\frac{A}{A+Q-U}$$</p>

<p>Here we can see that if unemployed increase vacancy rate would go up?</p>

<p>Why is there a negatively correlation then? Take the beveridge curve as an example :</p>

<p><a href="https://en.wikipedia.org/wiki/Beveridge_curve" rel="nofollow noreferrer">https://en.wikipedia.org/wiki/Beveridge_curve</a></p>

CC BY-SA 3.0
2016-11-01T22:05:02.240Z
I have no idea what you are asking here. Maybe rephrase the question.
Jamzy
CC BY-SA 3.0
2016-11-01T22:08:25.117Z
Are you asking 'why is unemployment lower when job vacancies are higher?'. Unemployed people are people are looking for work. When you increase the thing that they are looking for (work), there will be less of them.
Jamzy
<macroeconomics><labor-economics>
Why are vacancy rate and unemployment rate negatively correlated?
Kuantew
# Why are vacancy rate and unemployment rate negatively correlated?

(Asked by: username_0 on 2016-11-01)

Why is this the case?

Since Vacancy rate is defined as following,

let $A,Q,U$ denote number of vacancies in the economy, labor force, unemployed respectively.

$$\frac{A}{A+Q-U}$$

Here we can see that if unemployed increase vacancy rate would go up?

Why is there a negatively correlation then? Take the beveridge curve as an example :

<https://en.wikipedia.org/wiki/Beveridge_curve>

**Tags:** macroeconomics, labor-economics

> **Comments:**
> **username_1**: I have no idea what you are asking here. Maybe rephrase the question.  
> **username_1**: Are you asking 'why is unemployment lower when job vacancies are higher?'. Unemployed people are people are looking for work. When you increase the thing that they are looking for (work), there will be less of them.  

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## 2 answers

### Answer by username_2 on 2016-11-02. Score: 1 | Accepted answer

Adopting your notation, the vacancy rate at any given time is defined as $A/Q$. There is no mechanical relationship between the unemployment rate $U/Q$ and vacancy rate (A/Q).

They are negatively related because when vacancy rate is high, it means there are many unfilled job openings, and they are unfilled probably because most people already have a job, thus lower unemployment rate. And vice versa.


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### Answer by username_3 on 2016-11-01. Score: 0

The number of vacancies does not change with U. It is the proportion that will change. In other words A will not change because U increases, but the ratio will go up.


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