The time trend in the matching function
"We revisit the puzzling finding that labour market performance appears to deteriorate, as suggested by negative time trends in empirical matching functions. We investigate whether these trends simply arise from omitted variable bias. Concretely, we consider the omission of job seekers beyond the unemployed, the omission of inflows as opposed to stocks, and the failure to account for vacancy dynamics. We first build a model of all labour market flows and use it to construct series for these flows from aggregate data on the U.S. labour market. Using these series, we obtain a measure for employed and non-participating job seekers. When we thus include all job seekers, the estimated time trend remains unchanged. We similarly obtain measures for inflows into unemployment and vacancies. When these are included, the magnitude of the time trend is halved but remains significant. When we account for basic vacancy dynamics, the estimated time trend can be fully explained by omitted variable bias. As suggested by this result, we present evidence that empirical matching functions can be interpreted as versions of the law of motion for vacancies: the coefficients in matching functions coincide with the coefficients in the law of motion after correcting for omitted variable bias." (Author's abstract, IAB-Doku) ((en))
|Date of creation:||29 Feb 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Regensburger Str. 104, D-90327 Nürnberg|
Web page: http://www.iab.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Abowd, John M & Zellner, Arnold, 1985. "Estimating Gross Labor-Force Flows," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(3), pages 254-83, June.
- Karen Mumford & Peter N. Smith, .
"The Hiring Function Reconsidered: On Closing The Circle,"
96/45, Department of Economics, University of York.
- 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.
- Karen Mumford & P Smith, 1997. "The Hiring Function Reconsidered: On Closing the Circle," CEP Discussion Papers dp0359, Centre for Economic Performance, LSE.
- Ramey, Garey & Shigeru Fujita, 2006.
"The Cyclicality of Job Loss and Hiring,"
University of California at San Diego, Economics Working Paper Series
qt4nz8p839, Department of Economics, UC San Diego.
- Christopher A. Pissarides & Barbara Petrongolo, 2001.
"Looking into the Black Box: A Survey of the Matching Function,"
Journal of Economic Literature,
American Economic Association, vol. 39(2), pages 390-431, June.
- Barbara Petrongolo & Christopher A. Pissarides, 2000. "Looking Into the Black Box: A Survey of the Matching Function," CEP Discussion Papers dp0470, Centre for Economic Performance, LSE.
- Petrongolo, Barbara & Pissarides, Christopher, 2000. "Looking Into The Black Box: A Survey Of The Matching Function," CEPR Discussion Papers 2409, C.E.P.R. Discussion Papers.
- 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.
- Bruce C. Fallick & Charles A. Fleischman, 2004. "Employer-to-employer flows in the U.S. labor market: the complete picture of gross worker flows," Finance and Economics Discussion Series 2004-34, Board of Governors of the Federal Reserve System (U.S.).
- Lindeboom, M. & Ours, J.C. & Renes, G., 1991.
"Matching employers and workers : an empirical analysis on the effectiveness of search,"
Serie Research Memoranda
0063, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
- Lindeboom, Maarten & van Ours, Jan C & Renes, Gusta, 1994. "Matching Employers and Workers: An Empirical Analysis on the Effectiveness of Search," Oxford Economic Papers, Oxford University Press, vol. 46(1), pages 45-67, January.
- van Ours, J.C. & Lindeboom, M. & Renes, G., 1994. "Matching employers and workers : An empirical analysis on the effectiveness of search," Other publications TiSEM 3ada67c1-145c-42d0-8726-f, Tilburg University, School of Economics and Management.
- Poterba, James M & Summers, Lawrence H, 1986. "Reporting Errors and Labor Market Dynamics," Econometrica, Econometric Society, vol. 54(6), pages 1319-38, November.
- Jackman, R & Layard, Richard & Pissarides, C, 1989. "On Vacancies," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(4), pages 377-94, November.
- Gregg, Paul & Petrongolo, Barbara, 2005. "Stock-flow matching and the performance of the labor market," European Economic Review, Elsevier, vol. 49(8), pages 1987-2011, November.
- 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.
- Margaret Stevens, 2007. "New Microfoundations For The Aggregate Matching Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 847-868, 08.
- Peter Kuhn & Hani Mansour, 2014.
"Is Internet Job Search Still Ineffective?,"
Royal Economic Society, vol. 124(581), pages 1213-1233, December.
- Patricia M. Anderson & Simon M. Burgess, 2000. "Empirical Matching Functions: Estimation and Interpretation Using State-Level Data," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 93-102, February.
- Hoyt Bleakley & Jeffrey C. Fuhrer, 1997. "Shifts in the Beveridge Curve, job matching, and labor market dynamics," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 3-19.
- Melvyn Coles & Barbara Petrongolo, 2008. "A Test Between Stock-Flow Matching And The Random Matching Function Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1113-1141, November.
- Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, 01.
- Robert Shimer, 2012.
"Reassessing the Ins and Outs of Unemployment,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 127-148, April.
When requesting a correction, please mention this item's handle: RePEc:iab:iabdpa:201203. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (IAB, Geschäftsbereich Dokumentation und Bibliothek)
If references are entirely missing, you can add them using this form.