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Do Aggregate Measures Of Mismatch Measure Mismatch?A Time Series Analysis Of Existing Concepts

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  • Horst Entorf

Abstract

This paper discusses the performance of popular mismatch indexes proposed by Lilien (1982), Jackman and Roper (1987), Jackman, Layard and Savouri (1991), and Lambert (1988). Results in the literature show that, with the exception of Lambert’s index, measures of mismatch reveal decreasing or at least stable mismatch for European labour markets. This result contradicts micro evidence which suggests declining mobility. Time series analysis performed in the paper tackles this puzzle, and shows that indices consisting of aggregate time series may lead to false conclusions. Measures of mismatch fail when time series shift upward: Without changing the relative structure between individual groups (regions, skills, occupation), this paper shows that trending time series imply decreasing mismatch for all but one index. The only exception is Lambert’s rho. Here stochastic trends lead to a spurious increase of mismatch. Keywords: Mismatch, labour mobility, time series analysis JEL classification: J60, C22, C43

Suggested Citation

  • Horst Entorf, 2003. "Do Aggregate Measures Of Mismatch Measure Mismatch?A Time Series Analysis Of Existing Concepts," Labor and Demography 0312006, EconWPA.
  • Handle: RePEc:wpa:wuwpla:0312006
    Note: Type of Document - pdf; pages: 25
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    Cited by:

    1. Sergio Destefanis & Giuseppe Mastromatteo, 2016. "The Beveridge Curve in the OECD. Before and after the great recession," Working Papers 5, Department of the Treasury, Ministry of the Economy and of Finance.
    2. Sergio Destefanis & Giuseppe Mastromatteo, 2015. "The OECD Beveridge Curve: technological progress, globalisation and institutional factors," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(1), pages 151-172, June.
    3. repec:jns:jbstat:v:227:y:2007:i:3:p:236-253 is not listed on IDEAS
    4. Dobrescu, Emilian, 2011. "Sectoral Structure and Economic Growth," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 5-36, September.

    More about this item

    Keywords

    mismatch indicators; trending time series; spurious results;

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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