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Measuring Matching Efficiency with Heterogeneous Jobseekers

Author

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  • Sam Schulhofer-Wohl

    (Federal Reserve Bank of Minneapolis)

  • Robert Hall

    (STANFORD UNIVERSITY)

Abstract

Matching efficiency is the productivity of the process for matching would-be workers to available jobs. Measurement of match efficiency follows the same principles as measuring a Hicks-neutral index of productivity of production. We develop a framework for measuring matching productivity when the population of jobseekers is heterogeneous. The efficiency index for each type of jobseeker is the monthly job-finding rate for the type adjusted for the overall tightness of the labor market. We break jobseekers into nine groups -- six for unemployed people by source of unemployment, plus jobseekers classified as out of the labor force and two types of people currently holding jobs but looking to make a job-to-job transition. The last three groups account for 78 percent of new hires during normal times. We focus on the period from 2005 through 2012. We find that overall matching efficiency declined over the period, but hardly more than its earlier downward trend. It rose in the year of maximum employment decline, 2009. Matching efficiency declined after 2007 in some types of unemployment, notably permanent job loss, quitting, and new entrants, but rose in others, such as unemployment initiated as a layoff with expectation of recall. Efficiency remained steady during the Great Recession for job-to-job transitions. In its peak year, 2010, unemployment was about one percentage point higher that it would have been if matching efficiency had remained constant.

Suggested Citation

  • Sam Schulhofer-Wohl & Robert Hall, 2014. "Measuring Matching Efficiency with Heterogeneous Jobseekers," 2014 Meeting Papers 368, Society for Economic Dynamics.
    • Handle: RePEc:red:sed014:368
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    Cited by:

    1. Marianna Kudlyak & Fabian Lange, 2014. "Measuring Heterogeneity in Job Finding Rates Among the Nonemployed Using Labor Force Status Histories," Working Paper 14-18, Federal Reserve Bank of Richmond.
    2. Robert E. Hall, 2015. "Quantifying the Lasting Harm to the US Economy from the Financial Crisis," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 71-128.
    3. Alessandro Gavazza & Simon Mongey & Giovanni L. Violante, 2018. "Aggregate Recruiting Intensity," American Economic Review, American Economic Association, vol. 108(8), pages 2088-2127, August.
    4. Andreas Hornstein & Marianna Kudlyak & Fabian Lange, 2014. "Measuring Resource Utilization in the Labor Market," Economic Quarterly, Federal Reserve Bank of Richmond, issue 1Q, pages 1-21.
    5. Regis Barnichon & Andrew Figura, 2015. "Labor Market Heterogeneity and the Aggregate Matching Function," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(4), pages 222-249, October.
    6. Martin S. Eichenbaum, 2015. "Comment," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 129-145.
    7. Ravn, Morten O. & Sterk, Vincent, 2017. "Job uncertainty and deep recessions," Journal of Monetary Economics, Elsevier, vol. 90(C), pages 125-141.
    8. Hie Ahn & James Hamilton, 2016. "Heterogeneity and Unemployment Dynamics," Working Papers id:11130, eSocialSciences.
    9. Andreas Hornstein & Marianna Kudlyak, 2015. "Estimating Matching Efficiency with Variable Search Effort," Working Paper Series 2016-24, Federal Reserve Bank of San Francisco.
    10. Martin S. Eichenbaum, 2014. "Comment on "Quantifying the Lasting Harm to the US Economy from the Financial Crisis"," NBER Chapters, in: NBER Macroeconomics Annual 2014, Volume 29, pages 129-145, National Bureau of Economic Research, Inc.
    11. Petr Sedlacek, 2016. "The aggregate matching function and job search from employment and out of the labor force," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 21, pages 16-28, July.
    12. Simon Mongey & Gianluca Violante & Alessandro Gavazza, 2015. "What Shifts the Beveridge Curve? Recruiting Intensity and Financial Shocks," 2015 Meeting Papers 1079, Society for Economic Dynamics.

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