Concerns have been raised in the recent recession about structural changes in the labor market that are reflected as changes in matching efficiency (shifts of the Beveridge curve). This paper shows that cyclical changes of heterogeneity of the unemployment pool are reflected in fluctuations of measured match efficiency. First, I document time variation in match efficiency using a unobserved components model. A by product of this procedure is a new estimate of time series properties of vacancies which is of separate interest. The obtained results show that match efficiency is procyclical and can explain 10-26% of variation in the job finding probability. Second, using a search and matching model with ex-ante heterogeneous workers I show that variation in the skill composition of the unemployment pool over the cycle is reflected in fluctuations of measured match efficiency. The model is able to explain up to 60% of the observed variation in the match efficiency and match efficiency accounts for roughly 18% of fluctuations in the measured job finding rate.