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Regional Dependencies in Job Creation: An Efficiency Analysis for Western Germany

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  • Fahr, René

    ()
    (University of Paderborn)

  • Sunde, Uwe

    ()
    (University of Munich)

Abstract

This paper investigates the efficiency of the matching process between job seekers and vacancy posting firms in West-Germany, using variation across labor market regions and across time. The results of a stochastic frontier analysis shed new light on extent and regional differences of search frictions, on potential determinants of frictional inefficiencies and on the consequences of German reunification for the matching process. The paper also presents novel evidence on the complex interactions between spatial contingencies among regional labor markets: matching efficiency decreases with spatial autocorrelation in hiring, implying indirect evidence for crowding externalities.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1660.

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Length: 34 pages
Date of creation: Jul 2005
Date of revision:
Publication status: published in: Applied Economics, 2006, 38 (10), 1193-1206
Handle: RePEc:iza:izadps:dp1660

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Keywords: spatial autocorrelation; regional unemployment; stochastic frontier; matching function;

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References

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  1. Gross, Dominique M., 1997. "Aggregate job matching and returns to scale in Germany," Economics Letters, Elsevier, Elsevier, vol. 56(2), pages 243-248, October.
  2. Fahr, René & Sunde, Uwe, 2002. "Employment Status, Endogenous Regional Mobility, and Spatial Dependencies in Labor Markets," IZA Discussion Papers 521, Institute for the Study of Labor (IZA).
  3. Broersma, Lourens & Van Ours, Jan C., 1999. "Job searchers, job matches and the elasticity of matching," Labour Economics, Elsevier, Elsevier, vol. 6(1), pages 77-93, March.
  4. Burgess, Simon & Profit, Stefan, 2001. "Externalities in the matching of workers and firms in ritain," Labour Economics, Elsevier, Elsevier, vol. 8(3), pages 313-333, June.
  5. Ours, J.C. van & Gorter, C., 1994. "Matching Unemployment and Vacancies in Regional Labour Markets; an empirical analysis for the Netherlands," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-142169, Tilburg University.
  6. G. Karagiannis & P. Midmore & V. Tzouvelekas, 2002. "Separating Technical Change from Time-Varying Technical Inefficiency in the Absence of Distributional Assumptions," Journal of Productivity Analysis, Springer, Springer, vol. 18(1), pages 23-38, July.
  7. Sergio Destefanis & Raquel Fonseca, 2007. "Matching Efficiency and Labour Market Reform in Italy: A Macroeconometric Assessment," LABOUR, CEIS, CEIS, vol. 21(1), pages 57-84, 03.
  8. Barbara Petrongolo & Christopher Pissarides, 2000. "Looking into the black box: a survey of the matching function," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 2122, London School of Economics and Political Science, LSE Library.
  9. René Fahr & Uwe Sunde, 2004. "Occupational job creation: patterns and implications," Oxford Economic Papers, Oxford University Press, vol. 56(3), pages 407-435, July.
  10. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, Springer, vol. 20(2), pages 325-32.
  11. Ours, J.C. van & Broersma, L., 1999. "Job searchers, job matches and the elasticity of matching," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-80319, Tilburg University.
  12. Sergio Destefanis & Raquel Fonseca, 2006. "Labour Market Reform and the Beveridge Curve across Italian Regions," AIEL Series in Labour Economics, AIEL - Associazione Italiana Economisti del Lavoro, in: Floro Ernesto Caroleo & Sergio Destefanis (ed.), The European Labour Market. Regional Dimensions, edition 1, chapter 6, pages 147-163 AIEL - Associazione Italiana Economisti del Lavoro.
  13. Pekka Ilmakunnas & Hanna Pesola, 2003. "Regional Labour Market Matching Functions and Efficiency Analysis," LABOUR, CEIS, CEIS, vol. 17(3), pages 413-437, 09.
  14. Fahr, René & Sunde, Uwe, 2004. "Occupational job creation: Patterns and implications," Munich Reprints in Economics, University of Munich, Department of Economics 20488, University of Munich, Department of Economics.
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Citations

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Cited by:
  1. Aki Kangasharju & Sanna-Mari Hynninen & Jaakko Pehkonen, 2006. "Regional Matching Frictions and Aggregate Unemployment," Discussion Papers, Government Institute for Economic Research Finland (VATT) 383, Government Institute for Economic Research Finland (VATT).
  2. Reinhold Kosfeld, 2007. "Regional Spillovers and Spatial Heterogeneity in Matching Workers and Employers in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 227(3), pages 236-253, June.
  3. Fitzenberger, Bernd & Furdas, Marina, 2012. "Benchmarking Regions: Estimating the Counterfactual Distribution of Labor Market Outcomes," IZA Discussion Papers 6465, Institute for the Study of Labor (IZA).
  4. Jeruzalski, Tomasz & Tyrowicz, Joanna, 2009. "(In)Efficiency of Matching - The Case of A Post-transition Economy," MPRA Paper 16598, University Library of Munich, Germany.
  5. Drine, Imed & Bou Abid, Anis, 2010. "Efficiency frontier and matching process on the labor market: Evidence from Tunisia," MPRA Paper 21994, University Library of Munich, Germany.
  6. Altavilla, Carlo & Caroleo, Floro Ernesto, 2009. "Unintended Effects of National-based Active Labour Market Policies," IZA Discussion Papers 4045, Institute for the Study of Labor (IZA).
  7. Jekaterina Dmitrijeva, 2008. "Matching and Labour Market Efficiency across Space and through EU accession: Evidence from Latvia, Estonia and Slovenia," Documents de recherche, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne 08-05, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
  8. Carlo Altavilla & Floro Ernesto Caroleo, 2011. "Asymmetric Effects of National-based Active Labour Market Policies," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 293, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  9. René Fahr & Uwe Sunde, 2009. "Did the Hartz Reforms Speed-Up the Matching Process? A Macro-Evaluation Using Empirical Matching Functions," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 10, pages 284-316, 08.
  10. Iva Tomic, 2012. "The Efficiency of the Matching Process: Exploring the Impact of Regional Employment Offices in Croatia," Working Papers, The Institute of Economics, Zagreb 1204, The Institute of Economics, Zagreb.
  11. Sanna-Mari Hynninen, 2009. "Matching in local labor markets: a stochastic frontier approach," Journal of Productivity Analysis, Springer, Springer, vol. 31(1), pages 15-26, February.
  12. Sergio Destefanis & Raquel Fonseca, 2006. "Labour-Market Reforms and the Beveridge Curve. Some Macro Evidence for Italy," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 168, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  13. Christian Holzner & Sonja Munz, 2011. "Should Local Public Employment Services be Merged with the Local Social Benefit Administrations?," CESifo Working Paper Series 3472, CESifo Group Munich.
  14. Gebel, Michael, 2006. "Monitoring und Benchmarking bei arbeitsmarktpolitischen Maßnahmen," ZEW Dokumentationen, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 06-01, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  15. Hillmann, Katja, 2009. "Does the Hartz IV Reform have an Effect on Matching Efficiency in Germany? A Stochastic Frontier Approach," MPRA Paper 22295, University Library of Munich, Germany.
  16. Lottmann, Franziska, 2012. "Spatial dependencies in German matching functions," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 42(1-2), pages 27-41.

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