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Vacancies, Hirings, and the Duration Function

Author

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  • Farm, Ante

    () (Swedish Institute for Social Research, Stockholm University)

Abstract

While the matching function relates hirings (H) to vacancies (V) and unemployment, the duration function relates the average duration of vacancies as measured by V/H to unemployment. Shifts of the duration function are equivalent to shifts of the matching function but easier to interpret. Therefore, this paper focuses on the microfoundations of the duration function. We find, first, that outward shifts of the duration function, or, equivalently, longer recruitment times at given unemployment, have no direct effects on hirings. Second, the effect of longer recruitment times on hirings through higher recruitment costs depends on the relative importance of vacancy costs in total recruitment costs, where vacancy costs include the opportunity cost of unfilled jobs. Third, this paper reports information on unfilled jobs (unmet demand) as distinct from job vacancies (recruitment processes) according to a new business survey in Sweden.

Suggested Citation

  • Farm, Ante, 2003. "Vacancies, Hirings, and the Duration Function," Working Paper Series 2/2003, Stockholm University, Swedish Institute for Social Research.
  • Handle: RePEc:hhs:sofiwp:2003_002
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    References listed on IDEAS

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    1. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, pages 390-431.
    2. Barron, John M & Bishop, John, 1985. "Extensive Search, Intensive Search, and Hiring Costs: New Evidence on Employer Hiring Activity," Economic Inquiry, Western Economic Association International, vol. 23(3), pages 363-382, July.
    3. Nber, 1966. "The Measurement and Interpretation of Job Vacancies," NBER Books, National Bureau of Economic Research, Inc, number unkn66-2.
    4. Barron, John M & Bishop, John & Dunkelberg, William C, 1985. "Employer Search: The Interviewing and Hiring of New Employees," The Review of Economics and Statistics, MIT Press, pages 43-52.
    5. Katharine G. Abraham, 1987. "Help-Wanted Advertising, Job Vacancies, and Unemployment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 207-248.
    6. Charles Holt & Martin David, 1966. "The Concept of Job Vacancies in a Dynamic Theory of the Labor Market," NBER Chapters,in: The Measurement and Interpretation of Job Vacancies, pages 73-110 National Bureau of Economic Research, Inc.
    7. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627 Elsevier.
    8. Bent Hansen, 1970. "Excess Demand, Unemployment, Vacancies, and Wages," The Quarterly Journal of Economics, Oxford University Press, vol. 84(1), pages 1-23.
    9. W. Thomson, 1966. "Collection and Use of Job Vacancy Data in Canada," NBER Chapters,in: The Measurement and Interpretation of Job Vacancies, pages 173-194 National Bureau of Economic Research, Inc.
    10. Pissarides, Christopher A, 1984. "Search Intensity, Job Advertising, and Efficiency," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 128-143, January.
    11. Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 1-76.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Job vacancies; hirings; friction; matching function; Beveridge curve;

    JEL classification:

    • 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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