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An Empirical Micro Matching Model with an Application to Italy and Spain

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  • Franco Peracchi

    ()
    (Tor Vergata University)

  • Eliana Viviano

    ()
    (Bank of Italy)

Abstract

A large literature investigates the role of frictions in explaining labour market dynamics. Their presence is often summarized by an aggregate matching function relating the number of job matches to total unemployment and total vacancies. Most empirical specifications, however, are only reduced forms with no micro-foundation. Further, for many countries, empirical research on the matching function cannot be carried out because data on vacancies are simply not available. This paper looks at a job match as a transition from non-employment to employment. This transition is decomposed into two parts, one determined by the matching technology and one by individual search intensity. We show how the micro-founded model of Pissarides (1979) can be identified using only microdata on labour market transitions. This enables us to obtain a measure of market tightness even without information on the demand side of the market. The method is then applied to estimating the Italian and Spanish matching functions using data from the quarterly labour force surveys.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 538.

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Date of creation: Dec 2004
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Handle: RePEc:bdi:wptemi:td_538_04

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Keywords: Matching function; market tightness; labour market transitions; search intensity;

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References

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  1. Viviano Eliana, 2003. "Un'analisi critica delle definizioni di disoccupazione e partecipazione in Italia," Politica economica, Società editrice il Mulino, issue 1, pages 161.
  2. Ricardo A. Lagos, . ""An Alternative Approach to Market Frictions: An Application to the Market for Taxicab Rides''," CARESS Working Papres 96-09, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  3. Yashiv, E., 1999. "The Determinants of Equilibrium Unemployment," Papers 36-99, Tel Aviv.
  4. Berman, Eli, 1997. "Help Wanted, Job Needed: Estimates of a Matching Function from Employment Service Data," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages S251-92, January.
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  7. Karen Mumford & Peter N. Smith, . "The Hiring Function Reconsidered: On Closing The Circle," Discussion Papers 96/45, Department of Economics, University of York.
  8. Daniel Cohen & Arnaud Lefranc & Gilles Saint-Paul, 1997. "French unemployment: a transatlantic perspective," Economic Policy, CEPR & CES & MSH, vol. 12(25), pages 265-292, October.
  9. Sergi Jiménez-Martín & Franco Peracchi, 2002. "Sample attrition and labor force dynamics: Evidence from the Spanish labor force survey," Spanish Economic Review, Springer, vol. 4(2), pages 79-102.
  10. Sonsoles Castillo & Juan F. Jimeno & Omar Licandro, . "Employment segmentation, labour mobility and Mismatch: Spain, 1987-1993," Working Papers 98-04, FEDEA.
  11. van den Berg, Gerard J, 1999. "Empirical Inference with Equilibrium Search Models of the Labour Market," Economic Journal, Royal Economic Society, vol. 109(456), pages F283-306, June.
  12. Garrido, Luis & Toharia, Luis, 2004. "What does it take to be (counted as) unemployed? The case of Spain," Labour Economics, Elsevier, vol. 11(4), pages 507-523, August.
  13. Barbara Petrongolo & Christopher Pissarides, 2000. "Looking into the black box: a survey of the matching function," LSE Research Online Documents on Economics 2122, London School of Economics and Political Science, LSE Library.
  14. Stephen R. G. Jones & W. Craig Riddell, . "The Measurement Of Unemployment: An Empirical Approach," Canadian International Labour Network Working Papers 09, McMaster University.
  15. Saint-Paul, Gilles, 2000. "Flexibility vs. Rigidity: Does Spain have the worst of both Worlds?," IZA Discussion Papers 144, Institute for the Study of Labor (IZA).
  16. Ours, J.C. van & Broersma, L., 1999. "Job searchers, job matches and the elasticity of matching," Open Access publications from Tilburg University urn:nbn:nl:ui:12-80319, Tilburg University.
  17. Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
  18. Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-33, December.
  19. Pissarides, Christopher A, 1988. "The Search Equilibrium Approach to Fluctuations in Employment," American Economic Review, American Economic Association, vol. 78(2), pages 363-68, May.
  20. Patricia M. Anderson & Simon M. Burgess, 2000. "Empirical Matching Functions: Estimation and Interpretation Using State-Level Data," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 93-102, February.
  21. Gerard J. van den Berg & Geert Ridder, 1998. "An Empirical Equilibrium Search Model of the Labor Market," Econometrica, Econometric Society, vol. 66(5), pages 1183-1222, September.
  22. Broersma, Lourens & Van Ours, Jan C., 1999. "Job searchers, job matches and the elasticity of matching," Labour Economics, Elsevier, vol. 6(1), pages 77-93, March.
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Cited by:
  1. Sabrina Di Addario, 2006. "Job Search in Thick Markets: Evidence from Italy," Temi di discussione (Economic working papers) 605, Bank of Italy, Economic Research and International Relations Area.
  2. Di Addario, Sabrina, 2011. "Job search in thick markets," Journal of Urban Economics, Elsevier, vol. 69(3), pages 303-318, May.

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