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Matching in thin labour markets: panel data evidence from Finland, 1991-2002

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  • Aki Kangasharju

    ()

  • Jaakko Pehkonen

    ()

  • Sari Pekkala

    ()

Abstract

The matching function that postulates a relationship between the flow of new matches and stock of job seekers and vacancies has attracted considerable attention, both theoretical and empirical during the last decade. In this paper the properties of a matching function are examined by using a large panel data set from Finland. The data has a high frequency and it is highly disaggregated, comprising monthly data on 174 work-to-travel areas from a 12-year period between January 1991 and August 2002. We test for density effects, i.e. the importance of the size of markets on matching efficiency. The robustness and importance of our empirical findings are guaranteed by the quality of data. First the data allows us to model matching functions for two different measures of endogenous variables, namely total matches and total outflow from unemployment. Second, we can measure job seekers by their origin, i.e. whether they are unemployed, employed or outside of the labour force. We can thus construct matching models where the measure of job matches and the pool of job searchers are consistent with each other. Third, the data includes information on the composition of the registered job seekers, including age, sex and the share of short- and long-term unemployment. These controls provide interesting information on possible differences in matching rates by these groups.

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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa03p208.

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Date of creation: Aug 2003
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Handle: RePEc:wiw:wiwrsa:ersa03p208

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  1. 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 urn:nbn:nl:ui:12-142169, Tilburg University.
  2. Olivier Jean Blanchard & Peter Diamond, 1990. "Ranking, Unemployment Duration, and Wages," NBER Working Papers 3387, National Bureau of Economic Research, Inc.
  3. Burdett, Kenneth & Coles, Melvyn G & van Ours, Jan C, 1994. "Temporal Aggregation Bias in Stock-Flow Models," CEPR Discussion Papers 967, C.E.P.R. Discussion Papers.
  4. Burda, Michael & Wyplosz, Charles, 1994. "Gross worker and job flows in Europe," European Economic Review, Elsevier, vol. 38(6), pages 1287-1315, June.
  5. Burgess, Simon & Profit, Stefan, 1998. "Externalities in the Matching of Workers and Firms in Britain," CEPR Discussion Papers 1854, C.E.P.R. Discussion Papers.
  6. Pekka Ilmakunnas & Hanna Pesola, 2003. "Regional Labour Market Matching Functions and Efficiency Analysis," LABOUR, CEIS, vol. 17(3), pages 413-437, 09.
  7. Burgess, Simon M., 1994. "Matching models and labour market flows," European Economic Review, Elsevier, vol. 38(3-4), pages 809-816, April.
  8. Patricia M. Anderson & Simon M. Burgess, 1995. "Empirical Matching Functions: Estimation and Interpretation Using Disaggregate Data," NBER Working Papers 5001, National Bureau of Economic Research, Inc.
  9. Coles, Melvyn G & Smith, Eric, 1994. "Cross-Section Estimation of the Matching Function: Evidence from England and Wales," CEPR Discussion Papers 966, C.E.P.R. Discussion Papers.
  10. Fahr, René & Sunde, Uwe, 2001. "Disaggregate Matching Functions," IZA Discussion Papers 335, Institute for the Study of Labor (IZA).
  11. Daniel Munich & Jan Svejnar & Katherine Terrell, 1999. "Worker-firm Matching and Unemployment in Transition to a Market Economy: (Why) Are the Czechs More Successful than Others?," CERGE-EI Working Papers wp141, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  12. 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.
  13. Mumford, Karen & Smith, Peter N, 1999. " The Hiring Function Reconsidered: On Closing the Circle," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(3), pages 343-64, August.
  14. Lourens Broersma, 1997. "Competition between employed and unemployed job searchers: is there a difference between the UK and The Netherlands?," Applied Economics Letters, Taylor & Francis Journals, vol. 4(3), pages 199-203.
  15. Burgess, Simon M, 1993. "A Model of Competition between Unemployed and Employed Job Searchers: An Application to the Unemployment Outflow Rate in Britain," Economic Journal, Royal Economic Society, vol. 103(420), pages 1190-204, September.
  16. Gregg, P & Petrongolo, B, 1997. "Random or Non-Random Matching? Implications for the Use of the UV Curve as a Measure of Matching Performance," Papers 13, Centre for Economic Performance & Institute of Economics.
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