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Dual Labour Markets and Matching Frictions

Author

Listed:
  • Dario Sciulli

    () (University of Pescara and CEEAplA)

  • Antonio Gomes de Menezes

    () (University of the Azores and CEEAplA)

  • José Cabral Vieira

    () (University of the Azores, CEEAplA and IZA)

Abstract

This paper focuses on friction in the matching process arising in a dual labour market where good and bad jobs coexist. In particular, we present an empirical investigation of the role of strong preferences for permanent contracts to explain job mismatch and longer unemployment duration. To allow for a more flexible matching technology specification and to control for the role of micro level characteristics, we estimate a matching function using different specifications of hazard models for multiple unemployment spells, allowing both random matching and stock-flow matching mechanisms. We find evidence that the determinants of reemployment probabilities differ by gender. We also find a positive effect from having previous job experiences and, according to semi-parametric specifications, undergoing training while unemployed on reemployment probabilities. Overall we find that higher heterogeneity in searched and offered contract types increases frictions in the matching process. Specifically, individuals looking for a permanent contract experience longer unemployment duration, suggesting the existence of congestion problems related to the permanent job labour market segment. Finally, in order to reduce frictions in the matching process, policies aimed to provide training and to increase desirability of temporary contracts should be promoted.

Suggested Citation

  • Dario Sciulli & Antonio Gomes de Menezes & José Cabral Vieira, 2008. "Dual Labour Markets and Matching Frictions," CEIS Research Paper 119, Tor Vergata University, CEIS, revised 14 Jul 2008.
  • Handle: RePEc:rtv:ceisrp:119
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    More about this item

    Keywords

    Hazard Models; Dual Labour Markets; Temporary Contracts; Matching Mechanism.;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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