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Do Aggregate Measures Of Mismatch Measure Mismatch?A Time Series Analysis Of Existing Concepts

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Author Info

  • Horst Entorf

Abstract

This paper discusses the performance of popular mismatch indexes proposed by Lilien (1982), Jackman and Roper (1987), Jackman, Layard and Savouri (1991), and Lambert (1988). Results in the literature show that, with the exception of Lambert’s index, measures of mismatch reveal decreasing or at least stable mismatch for European labour markets. This result contradicts micro evidence which suggests declining mobility. Time series analysis performed in the paper tackles this puzzle, and shows that indices consisting of aggregate time series may lead to false conclusions. Measures of mismatch fail when time series shift upward: Without changing the relative structure between individual groups (regions, skills, occupation), this paper shows that trending time series imply decreasing mismatch for all but one index. The only exception is Lambert’s rho. Here stochastic trends lead to a spurious increase of mismatch. Keywords: Mismatch, labour mobility, time series analysis JEL classification: J60, C22, C43

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File URL: http://128.118.178.162/eps/lab/papers/0312/0312006.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Labor and Demography with number 0312006.

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Length: 25 pages
Date of creation: 25 Dec 2003
Date of revision:
Handle: RePEc:wpa:wuwpla:0312006

Note: Type of Document - pdf; pages: 25
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Web page: http://128.118.178.162

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Keywords: mismatch indicators; trending time series; spurious results;

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Cited by:
  1. 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, vol. 227(3), pages 236-253, June.
  2. Dobrescu, Emilian, 2011. "Sectoral Structure and Economic Growth," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 5-36, September.

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