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

  • 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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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
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Handle: RePEc:wiw:wiwrsa:ersa03p208
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  1. 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.
  2. Burgess, Simon & Profit, Stefan, 1998. "Externalities in the Matching of Workers and Firms in Britain," CEPR Discussion Papers 1854, C.E.P.R. Discussion Papers.
  3. 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.
  4. 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, School of Economics and Management.
  5. Pekka Ilmakunnas & Hanna Pesola, 2003. "Regional Labour Market Matching Functions and Efficiency Analysis," LABOUR, CEIS, vol. 17(3), pages 413-437, 09.
  6. Burda, Michael & Wyplosz, Charles, 1994. "Gross worker and job flows in Europe," European Economic Review, Elsevier, vol. 38(6), pages 1287-1315, June.
  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. Fahr, René & Sunde, Uwe, 2001. "Disaggregate Matching Functions," IZA Discussion Papers 335, Institute for the Study of Labor (IZA).
  9. 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.
  10. Burgess, Simon M., 1994. "Matching models and labour market flows," European Economic Review, Elsevier, vol. 38(3-4), pages 809-816, April.
  11. 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.
  12. repec:ner:tilbur:urn:nbn:nl:ui:12-153334 is not listed on IDEAS
  13. Blanchard, Olivier Jean & Diamond, Peter A, 1994. "Ranking, Unemployment Duration, and Wages," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 417-34, July.
  14. 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.
  15. 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.
  16. 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 589-97, November.
  17. repec:ner:tilbur:urn:nbn:nl:ui:12-142169 is not listed on IDEAS
  18. 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 1190-204, September.
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