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Firm-to-firm labor flows and the aggregate matching function: A network-based test using employer–employee matched records

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  • Guerrero, Omar A.
  • López, Eduardo

Abstract

The assumption of aggregate matching functions in labor markets is tested using a network configuration model for directed multigraphs. We use employer–employee matched records of the universe of employees and firms in Finland and find that aggregate matching functions, even at the level of submarkets, cannot explain the vast majority of the observed patterns of labor flows between firms. Our findings suggest the need for theoretical frameworks that take into account the structure of labor market frictions.

Suggested Citation

  • Guerrero, Omar A. & López, Eduardo, 2015. "Firm-to-firm labor flows and the aggregate matching function: A network-based test using employer–employee matched records," Economics Letters, Elsevier, vol. 136(C), pages 9-12.
    • Handle: RePEc:eee:ecolet:v:136:y:2015:i:c:p:9-12
    DOI: 10.1016/j.econlet.2015.08.009
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    References listed on IDEAS

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    1. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
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    8. Axtell, Robert L. & Guerrero, Omar A. & López, Eduardo, 2016. "The Network Composition of Aggregate Unemployment," MPRA Paper 68962, University Library of Munich, Germany.
    9. Melvyn Coles & Barbara Petrongolo, 2008. "A Test Between Stock-Flow Matching And The Random Matching Function Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1113-1141, November.
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    Cited by:

    1. Axtell, Robert L. & Guerrero, Omar A. & López, Eduardo, 2019. "Frictional unemployment on labor flow networks," Journal of Economic Behavior & Organization, Elsevier, vol. 160(C), pages 184-201.
    2. Axtell, Robert L. & Guerrero, Omar A. & López, Eduardo, 2016. "The Network Composition of Aggregate Unemployment," MPRA Paper 68962, University Library of Munich, Germany.
    3. Kathyrn R. Fair & Omar A. Guerrero, 2023. "Endogenous Labour Flow Networks," Papers 2301.07979, arXiv.org, revised Mar 2023.
    4. Paweł Lula & Anna Kovaleva & Renata Oczkowska & Małgorzata Tyrańska & Sylwia Wiśniewska, 2019. "Bipartite Competency Schemas on Polish Labor Market," Central European Business Review, Prague University of Economics and Business, vol. 2019(4), pages 1-25.

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    More about this item

    Keywords

    Aggregate matching function; Networks; Multigraphs; Labor reallocation; Job search; Employer–employee matched records;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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