Unemployment and vacancy in the Hong Kong labour market

Abstract

This paper combines unemployment and vacancy data to analyse the efficiency of the Hong Kong labour market for the period 1976 to 1997. It is confirmed that the negative relationship between unemployment and vacancy, commonly known as the Beveridge curve, applies to the Hong Kong labour market. There was an inward shift of the Beveridge curve around 1982, which implies falling match frictions since then. Systematic evidence is also found that Hong Kong has been close to full employment, for on average, around 80% of unemployment in the period was due to structural and frictional unemployment with only 20% attributable to cyclical unemployment.