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Regional dependencies in job creation: An efficiency analysis for Western Germany


  • Fahr, René
  • Sunde, Uwe


This paper investigates the efficiency of the matching process between job seekers and vacancy posting firms in West Germany, using variation across labour market regions and across time. The results of a stochastic frontier analysis shed new light on the extent of and regional differences in search frictions, on potential determinants of frictional inefficiencies and on the consequences of German reunification for the matching process. The paper also presents novel evidence on the complex interactions between spatial contingencies among regional labour markets: matching efficiency decreases with spatial autocorrelation in hiring, implying indirect evidence for crowding externalities.

Suggested Citation

  • Fahr, René & Sunde, Uwe, 2006. "Regional dependencies in job creation: An efficiency analysis for Western Germany," Munich Reprints in Economics 20484, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenar:20484

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    References listed on IDEAS

    1. Sergio Destefanis & Raquel Fonseca, 2007. "Matching Efficiency and Labour Market Reform in Italy: A Macroeconometric Assessment," LABOUR, CEIS, vol. 21(1), pages 57-84, March.
    2. 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.
    3. Burgess, Simon & Profit, Stefan, 2001. "Externalities in the matching of workers and firms in ritain," Labour Economics, Elsevier, vol. 8(3), pages 313-333, June.
    4. G. Karagiannis & P. Midmore & V. Tzouvelekas, 2002. "Separating Technical Change from Time-Varying Technical Inefficiency in the Absence of Distributional Assumptions," Journal of Productivity Analysis, Springer, vol. 18(1), pages 23-38, July.
    5. Gross, Dominique M., 1997. "Aggregate job matching and returns to scale in Germany," Economics Letters, Elsevier, vol. 56(2), pages 243-248, October.
    6. van Ours, J.C. & Gorter, C., 1994. "Matching unemployment and vacancies in regional labour markets; An empirical analysis for the Netherlands," Other publications TiSEM 63318c4d-4008-4f29-94eb-a, Tilburg University, School of Economics and Management.
    7. René Fahr & Uwe Sunde, 2004. "Occupational job creation: patterns and implications," Oxford Economic Papers, Oxford University Press, vol. 56(3), pages 407-435, July.
    8. Pekka Ilmakunnas & Hanna Pesola, 2003. "Regional Labour Market Matching Functions and Efficiency Analysis," LABOUR, CEIS, vol. 17(3), pages 413-437, September.
    9. Broersma, Lourens & Van Ours, Jan C., 1999. "Job searchers, job matches and the elasticity of matching," Labour Economics, Elsevier, vol. 6(1), pages 77-93, March.
    10. Sergio Destefanis & Raquel Fonseca, 2006. "Labour Market Reform and the Beveridge Curve across Italian Regions," AIEL Series in Labour Economics,in: Floro Ernesto Caroleo & Sergio Destefanis (ed.), The European Labour Market. Regional Dimensions, edition 1, chapter 6, pages 147-163 AIEL - Associazione Italiana Economisti del Lavoro.
    11. Fahr, René & Sunde, Uwe, 2002. "Employment Status, Endogenous Regional Mobility, and Spatial Dependencies in Labor Markets," IZA Discussion Papers 521, Institute for the Study of Labor (IZA).
    12. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
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    Cited by:

    1. Gebel, Michael, 2006. "Monitoring und Benchmarking bei arbeitsmarktpolitischen Maßnahmen," ZEW Dokumentationen 06-01, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Elzbieta Antczak & Ewa Galecka-Burdziak & Robert Pater, 2016. "Efficiency in spatially disaggregated labour market matching," Working Papers 2016-010, Warsaw School of Economics, Collegium of Economic Analysis.
    3. Fitzenberger, Bernd & Furdas, Marina, 2012. "Benchmarking Regions: Estimating the Counterfactual Distribution of Labor Market Outcomes," IZA Discussion Papers 6465, Institute for the Study of Labor (IZA).
    4. René Fahr & Uwe Sunde, 2009. "Did the Hartz Reforms Speed-Up the Matching Process? A Macro-Evaluation Using Empirical Matching Functions," German Economic Review, Verein für Socialpolitik, vol. 10, pages 284-316, August.
    5. Abid, Anis Bou & Drine, Imed, 2011. "Efficiency frontier and matching process on the labour market: Evidence from Tunisia," Economic Modelling, Elsevier, vol. 28(3), pages 1131-1139, May.
    6. Anna Batyra & David de la Croix & Olivier Pierrard & Henri Sneessens, 2016. "Structural changes in the labor market and the rise of early retirement in Europe," CREA Discussion Paper Series 16-13, Center for Research in Economic Analysis, University of Luxembourg.
    7. Sergio Destefanis & Raquel Fonseca, 2006. "Labour-Market Reforms and the Beveridge Curve. Some Macro Evidence for Italy," CSEF Working Papers 168, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    8. Carlo Altavilla & Floro Ernesto Caroleo, 2013. "Asymmetric Effects of National-based Active Labour Market Policies," Regional Studies, Taylor & Francis Journals, vol. 47(9), pages 1482-1506, October.
    9. Iva Tomic, 2012. "The Efficiency of the Matching Process: Exploring the Impact of Regional Employment Offices in Croatia," Working Papers 1204, The Institute of Economics, Zagreb.
    10. repec:jns:jbstat:v:227:y:2007:i:3:p:236-253 is not listed on IDEAS
    11. Kangasharju, Aki & Hynninen Sanna-Mari, Pehkonen Jaakko, 2006. "Regional Matching Frictions and Aggregate Unemployment," Discussion Papers 383, VATT Institute for Economic Research.
    12. Lottmann, Franziska, 2012. "Spatial dependencies in German matching functions," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 27-41.
    13. Michael Weber, 2016. "The short-run and long-run effects of decentralizing public employment services," ifo Working Paper Series 209, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    14. Sanna-Mari Hynninen, 2009. "Matching in local labor markets: a stochastic frontier approach," Journal of Productivity Analysis, Springer, vol. 31(1), pages 15-26, February.
    15. Joanna Tyrowicz & Tomasz Jeruzalski, 2013. "(In)Efficiency of matching: the case of a post-transition economy," Economic Change and Restructuring, Springer, vol. 46(2), pages 255-275, May.
    16. Jekaterina Dmitrijeva, 2008. "Matching and Labour Market Efficiency across Space and through EU accession: Evidence from Latvia, Estonia and Slovenia," Documents de recherche 08-05, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    17. Iva Tomić, 2014. "Regional matching (in)efficiency on the Croatian labour market," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(3), pages 287-312, September.
    18. Kosfeld, Reinhold, 2006. "Regional spillovers and spatial heterogeneity in matching workers and employers in Germany," Volkswirtschaftliche Diskussionsbeiträge 89, University of Kassel, Faculty of Economics and Management.
    19. Christian Holzner & Sonja Munz, 2011. "Should Local Public Employment Services be Merged with the Local Social Benefit Administrations?," CESifo Working Paper Series 3472, CESifo Group Munich.
    20. Haller, Peter & Heuermann, Daniel F., 2016. "Job search and hiring in local labor markets: Spillovers in regional matching functions," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 125-138.
    21. Sergio Destafanis & Raquel Fonseca Benito, 2007. "Labour-Market Reforms and the Beveridge Curve Some Macro Evidence for Italy," Working Papers WR-436, RAND Corporation.
    22. Hillmann, Katja, 2009. "Does the Hartz IV Reform have an Effect on Matching Efficiency in Germany? A Stochastic Frontier Approach," MPRA Paper 22295, University Library of Munich, Germany.
    23. Altavilla, Carlo & Caroleo, Floro Ernesto, 2009. "Unintended Effects of National-based Active Labour Market Policies," IZA Discussion Papers 4045, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)


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