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Externalities in the Matching of Workers and Firms in Britain

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  • Simon Burgess
  • Stefan Profit

Abstract

We provide empirical evidence on the nature of spatial externalities in a matching model for the UK. We use a monthly panel of outflows, unemployment and vacancy stocks data from the registers at Jobcentres in the UK; these are mapped on to travel-to-work areas. We find evidence of significant spill-over effects that are generally in line with the predictions of theory. For example, we find that conditional on local labour market conditions, high unemployment levels in neighbouring areas raise the number of local filled vacancies but lower the local outflow from unemployment.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0490.

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Date of creation: Apr 2001
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Handle: RePEc:cep:cepdps:dp0490

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: matching model; externalities; spatial dependence; unemployment outflows;

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References

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  1. Stephen Nickell & Tracy Jones & Glenda Quintini, 2000. "A picture of job insecurity facing British men," LSE Research Online Documents on Economics 20141, London School of Economics and Political Science, LSE Library.
  2. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "Job reallocation, employment fluctuations and unemployment," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 18, pages 1171-1228 Elsevier.
  3. M. C. Burda & S. Profit, 1996. "Matching Across Space: Evidence on Mobility in the Czech Republik," SFB 373 Discussion Papers 1996,11, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  4. Simon Burgess & H Turon, 2000. "Unemployment Dynamics, Duration and Equilibrium: Evidence from Britain," CEP Discussion Papers dp0474, Centre for Economic Performance, LSE.
  5. Gregg, Paul & Wadsworth, Jonathan, 1996. "How Effective Are State Employment Agencies? Jobcentre Use and Job Matching in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 443-67, August.
  6. Coles, Melvyn G & Smith, Eric, 1996. "Cross-Section Estimation of the Matching Function: Evidence from England and Wales," Economica, London School of Economics and Political Science, vol. 63(252), pages 589-97, November.
  7. John Schmitt & Jonathan Wadsworth, 1993. "Job Search Activity and Changing Unemployment Benefit Entitlement: Pseudo-Panel Estimates for Britain," CEP Discussion Papers dp0148, Centre for Economic Performance, LSE.
  8. Coles, Melvyn G & Smith, Eric, 1994. "Marketplaces and Matching," CEPR Discussion Papers 1048, C.E.P.R. Discussion Papers.
  9. Stephen Nickell & Glenda Quintini, 2001. "Nominal Wage Rigidity and the Rate of Inflation," CEP Discussion Papers dp0489, Centre for Economic Performance, LSE.
  10. Mortensen, Dale T & Pissarides, Christopher, 1999. "New Developments in Models of Search in the Labour Market," CEPR Discussion Papers 2053, C.E.P.R. Discussion Papers.
  11. A G Champion, 1994. "Population change and migration in Britain since 1981: evidence for continuing deconcentration," Environment and Planning A, Pion Ltd, London, vol. 26(10), pages 1501-1520, October.
  12. Fox, K.J., 1996. "Measuring Technical Progress in Matching Models of the Labour Market," Papers 96/7, New South Wales - School of Economics.
  13. Ours, J. C. van & Burdett, K. & Coles, M., 1994. "Temporal Aggregation Bias in Stock-Flow Models," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153334, Tilburg University.
  14. Stephen Nickell & John Van Reenen, 2001. "Technological Innovation and Performance in the United Kingdom," CEP Discussion Papers dp0488, Centre for Economic Performance, LSE.
  15. Gross, Dominique M., 1997. "Aggregate job matching and returns to scale in Germany," Economics Letters, Elsevier, vol. 56(2), pages 243-248, October.
  16. 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.
  17. Warren, Ronald Jr., 1996. "Returns to scale in a matching model of the labor market," Economics Letters, Elsevier, vol. 50(1), pages 135-142, January.
  18. Antolin, P., 1995. "Gross Worker Flows: How Does the Spanish Evidence Fit the Stylized Facts?," UFAE and IAE Working Papers 303.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  19. 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.
  20. Molho, Ian, 1995. "Migrant Inertia, Accessibility and Local Unemployment," Economica, London School of Economics and Political Science, vol. 62(245), pages 123-32, February.
  21. 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.
  22. Paul Gregg & Barbara Petrongolo, 1997. "Random or Non-Random matching? Implications for the use of the UV 234 curve as a measure of matching effectiveness," CEP Discussion Papers dp0348, Centre for Economic Performance, LSE.
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