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Estimating Matching Efficiency with Variable Search Effort

Author

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  • Hornstein, Andreas

    (Federal Reserve Bank of Richmond)

  • Kudlyak, Marianna

    (Federal Reserve Bank of San Francisco)

Abstract

We introduce a simple representation of endogenous search effort into the standard matching function with job-seeker heterogeneity. Using the estimated augmented matching function, we study the sources of changes in the average employment transition rate. In the standard matching function, the contribution of market tightness (matching efficiency) is increasing (decreasing) in the matching function elasticity. For our augmented matching function, search effort is procyclical for small matching elasticity and accounts for most of the transition rate volatility, with small contributions from market tightness and matching efficiency. For a large matching elasticity search effort is strongly countercyclical and large movements in matching efficiency compensate for that. Regardless of the matching elasticity, we find a substantial decline of the matching efficiency after 2007

Suggested Citation

  • Hornstein, Andreas & Kudlyak, Marianna, 2016. "Estimating Matching Efficiency with Variable Search Effort," Working Paper 16-13, Federal Reserve Bank of Richmond.
  • Handle: RePEc:fip:fedrwp:16-13
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    References listed on IDEAS

    as
    1. Sam Schulhofer-Wohl & Robert Hall, 2014. "Measuring Matching Efficiency with Heterogeneous Jobseekers," 2014 Meeting Papers 368, Society for Economic Dynamics.
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    Cited by:

    1. Alessandro Gavazza & Simon Mongey & Giovanni L. Violante, 2016. "Aggregate Recruiting Intensity," CEP Discussion Papers dp1449, Centre for Economic Performance, LSE.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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