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Matching in thin labour markets: panel data evidence from Finland, 1991-2002

Listed author(s):
  • Aki Kangasharju

    ()

  • Jaakko Pehkonen

    ()

  • Sari Pekkala

    ()

The matching function that postulates a relationship between the flow of new matches and stock of job seekers and vacancies has attracted considerable attention, both theoretical and empirical during the last decade. In this paper the properties of a matching function are examined by using a large panel data set from Finland. The data has a high frequency and it is highly disaggregated, comprising monthly data on 174 work-to-travel areas from a 12-year period between January 1991 and August 2002. We test for density effects, i.e. the importance of the size of markets on matching efficiency. The robustness and importance of our empirical findings are guaranteed by the quality of data. First the data allows us to model matching functions for two different measures of endogenous variables, namely total matches and total outflow from unemployment. Second, we can measure job seekers by their origin, i.e. whether they are unemployed, employed or outside of the labour force. We can thus construct matching models where the measure of job matches and the pool of job searchers are consistent with each other. Third, the data includes information on the composition of the registered job seekers, including age, sex and the share of short- and long-term unemployment. These controls provide interesting information on possible differences in matching rates by these groups.

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File URL: http://www-sre.wu-wien.ac.at/ersa/ersaconfs/ersa03/cdrom/papers/208.pdf
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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa03p208.

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Date of creation: Aug 2003
Handle: RePEc:wiw:wiwrsa:ersa03p208
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  1. Coles, Melvyn G & Smith, Eric, 1996. "Cross-Section Estimation of the Matching Function: Evidence from England and Wales," Economica, London School of Economics and Political Science, vol. 63(252), pages 589-597, November.
  2. Simon Burgess & Stefan Profit, 2001. "Externalities in the Matching of Workers and Firms in Britain," CEP Discussion Papers dp0490, Centre for Economic Performance, LSE.
  3. Karen Mumford & Peter N. Smith, "undated". "The Hiring Function Reconsidered: On Closing The Circle," Discussion Papers 96/45, Department of Economics, University of York.
  4. Burgess, Simon M, 1993. "A Model of Competition between Unemployed and Employed Job Searchers: An Application to the Unemployment Outflow Rate in Britain," Economic Journal, Royal Economic Society, vol. 103(420), pages 1190-1204, September.
  5. Blanchard, O.J. & Diamond, P., 1990. "Ranking, Unemployment Duration, And Wages," Working papers 546, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. 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.
  7. Lourens Broersma, 1997. "Competition between employed and unemployed job searchers: is there a difference between the UK and The Netherlands?," Applied Economics Letters, Taylor & Francis Journals, vol. 4(3), pages 199-203.
  8. Burgess, Simon M., 1994. "Matching models and labour market flows," European Economic Review, Elsevier, vol. 38(3-4), pages 809-816, April.
  9. Daniel Munich & Jan Svejnar & Katherine Terrell, 1998. "Worker-Firm Matching and Unemployment in Transition to a Market Economy: (Why) Were the Czechs More Successful than Others?," William Davidson Institute Working Papers Series 107, William Davidson Institute at the University of Michigan.
  10. Burda, Michael C & Wyplosz, Charles, 1993. "Gross Worker and Job Flows in Europe," CEPR Discussion Papers 868, C.E.P.R. Discussion Papers.
  11. 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.
  12. Pekka Ilmakunnas & Hanna Pesola, 2003. "Regional Labour Market Matching Functions and Efficiency Analysis," LABOUR, CEIS, vol. 17(3), pages 413-437, 09.
  13. Gregg, P & Petrongolo, B, 1997. "Random or Non-Random Matching? Implications for the Use of the UV Curve as a Measure of Matching Performance," Papers 13, Centre for Economic Performance & Institute of Economics.
  14. 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.
  15. Patricia M. Anderson & Simon M. Burgess, 1995. "Empirical Matching Functions: Estimation and Interpretation Using Disaggregate Data," NBER Working Papers 5001, National Bureau of Economic Research, Inc.
  16. Fahr, René & Sunde, Uwe, 2001. "Disaggregate Matching Functions," IZA Discussion Papers 335, Institute for the Study of Labor (IZA).
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