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Regional Labour Market Matching Functions and Efficiency Analysis

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  • Pekka Ilmakunnas
  • Hanna Pesola

Abstract

. Stochastic production frontiers are used for estimating regional matching functions where unemployment outflow is ‘produced’ by the unemployed and vacancies. The frontier is estimated using regional panel data from Finland from 1988 to 1997 and the Battese and Coelli frontier model, where the explanatory factors are included in the inefficiency term. The stochastic frontier matching function has constant returns, whereas in OLS estimation with fixed effects the returns are slightly increasing. Unemployment and vacancies in neighbouring regions have a spillover effect on efficiency. Excess job reallocation in a region deteriorates matching efficiency. The decomposition of total factor productivity change in matching to efficiency change and change in matching technology is also investigated by interpreting the matching frontier as a distance function and using Malmquist indexes. There is a downward trend in the technology, but short‐term variations are dominated by cyclical changes in efficiency.

Suggested Citation

  • Pekka Ilmakunnas & Hanna Pesola, 2003. "Regional Labour Market Matching Functions and Efficiency Analysis," LABOUR, CEIS, vol. 17(3), pages 413-437, September.
    • Handle: RePEc:bla:labour:v:17:y:2003:i:3:p:413-437
    DOI: 10.1111/1467-9914.00247
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    Cited by:

    1. Aki Kangasharju & Jaakko Pehkonen & Sari Pekkala, 2003. "Matching in thin labour markets: panel data evidence from Finland, 1991-2002," ERSA conference papers ersa03p208, European Regional Science Association.
    2. Carlo Altavilla & Floro Ernesto Caroleo, 2013. "Asymmetric Effects of National-based Active Labour Market Policies," Regional Studies, Taylor & Francis Journals, vol. 47(9), pages 1482-1506, October.
    3. Petrikaite, Vaiva & Hämäläinen, Saara, 2018. "Mobility with private information and privacy suppression," CEPR Discussion Papers 12860, C.E.P.R. Discussion Papers.
    4. Sergio Destefanis & Raquel Fonseca, 2006. "Labour-Market Reforms and the Beveridge Curve. Some Macro Evidence for Italy," CSEF Working Papers 168, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    5. Abid, Anis Bou & Drine, Imed, 2011. "Efficiency frontier and matching process on the labour market: Evidence from Tunisia," Economic Modelling, Elsevier, vol. 28(3), pages 1131-1139, May.
    6. Shi, Wenming & Lin, Kun-Chin & McLaughlin, Heather & Qi, Guanqiu & Jin, Mengjie, 2020. "Spatial distribution of job opportunities in China: Evidence from the opening of the high-speed rail," Transportation Research Part A: Policy and Practice, Elsevier, vol. 133(C), pages 138-147.
    7. repec:jns:jbstat:v:227:y:2007:i:3:p:236-253 is not listed on IDEAS
    8. Fitzenberger, Bernd & Furdas, Marina, 2012. "Benchmarking regions: Estimating the counterfactual distribution of labor market outcomes," ZEW Discussion Papers 12-023, ZEW - Leibniz Centre for European Economic Research.
    9. Kosfeld Reinhold, 2007. "Regional Spillovers and Spatial Heterogeneity in Matching Workers and Employers in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 227(3), pages 236-253, June.
    10. Kangasharju, Aki & Hynninen, Sanna-Mari & Pehkonen, Jaakko, 2006. "Regional Matching Frictions and Aggregate Unemployment," Discussion Papers 383, VATT Institute for Economic Research.
    11. Sanna-Mari Hynninen, 2005. "Labour market status of job seekers in regional matching processes," ERSA conference papers ersa05p499, European Regional Science Association.
    12. Elzbieta Antczak & Ewa Galecka-Burdziak & Robert Pater, 2016. "Efficiency in spatially disaggregated labour market matching," KAE Working Papers 2016-010, Warsaw School of Economics, Collegium of Economic Analysis.
    13. Rene Fahr & Uwe Sunde, 2006. "Regional dependencies in job creation: an efficiency analysis for Western Germany," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1193-1206.
    14. Sanna‐Mari Hynninen & Aki Kangasharju & Jaakko Pehkonen, 2009. "Matching Inefficiencies, Regional Disparities, and Unemployment," LABOUR, CEIS, vol. 23(3), pages 481-506, September.
    15. Elzbieta Antczak & Ewa Galecka-Burdziak & Robert Pater, 2016. "Spatial Labour Market Matching," CERGE-EI Working Papers wp578, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    16. Sanna-Mari Hynninen, 2009. "Matching in local labor markets: a stochastic frontier approach," Journal of Productivity Analysis, Springer, vol. 31(1), pages 15-26, February.
    17. Elżbieta Antczak & Ewa Gałecka‐Burdziak & Robert Pater, 2019. "What Affects Efficiency In Labour Market Matching At Different Territorial Aggregation Levels In Poland?," Bulletin of Economic Research, Wiley Blackwell, vol. 71(2), pages 160-179, April.
    18. Altavilla, Carlo & Caroleo, Floro Ernesto, 2009. "Unintended Effects of National-based Active Labour Market Policies," IZA Discussion Papers 4045, Institute of Labor Economics (IZA).
    19. Heidi Soininen, 2007. "Finnish Evidence of Changes in Labor Market Matching," Finnish Economic Papers, Finnish Economic Association, vol. 20(1), pages 57-71, Spring.
    20. Sergio Destefanis & Raquel Fonseca, 2006. "Labour-Market Reforms and the Beveridge Curve. Some Macro Evidence for Italy," CSEF Working Papers 168, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    21. Baños, José F. & Rodríguez-Álvarez, Ana & Suárez, Patricia, 2016. "Matching frontiers: A random parameter model approach," Efficiency Series Papers 2016/07, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    22. Ambra Poggi, 2019. "Regional labour markets in Spain: Can flexibility and local democracy reduce inefficiencies?," Papers in Regional Science, Wiley Blackwell, vol. 98(3), pages 1499-1516, June.

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