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Spatial Spillover Effects in the Labor Market in a Middle-Income Country

Author

Listed:
  • Leonardo Fabio Morales
  • Mauricio Quiñones
  • Eleonora Dávalos
  • Luis Felipe Gaviria

Abstract

Most macroeconomic labor literature on estimating matching functions does not consider spatial spillover effects. However, job search and vacancy-filling processes often involve neighboring locations, as local workers can search for and fill vacancies in nearby labor markets. We estimate a spatial spillover model using annual data for a middle-income country in Latin America. Our findings show that unemployment has a positive spatial spillover effect because an increase in the labor supply raises the probability of filling a vacancy. In contrast, vacancies have a negative spillover effect because local and neighboring vacancies compete to be filled by workers in both markets. RESUMEN: La mayor parte de la literatura laboral sobre la estimación de funciones de emparejamiento no considera los efectos de derrame espacial. Sin embargo, los procesos de búsqueda de empleo y de ocupación de vacantes a menudo involucran ubicaciones vecinas, ya que los trabajadores locales pueden buscar y cubrir vacantes en mercados laborales cercanos. En este trabajo se estima un modelo de derrame espacial utilizando datos anuales para Colombia. Nuestros hallazgos muestran que el desempleo tiene un efecto de derrame espacial positivo porque un aumento en la oferta laboral aumenta la probabilidad de ocupar una vacante. En contraste, las vacantes tienen un efecto de derrame negativo porque las vacantes locales y vecinas compiten por ser ocupadas por trabajadores de ambos mercados.

Suggested Citation

  • Leonardo Fabio Morales & Mauricio Quiñones & Eleonora Dávalos & Luis Felipe Gaviria, 2024. "Spatial Spillover Effects in the Labor Market in a Middle-Income Country," Borradores de Economia 1283, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:1283
    DOI: 10.32468/be.1283
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    More about this item

    Keywords

    Matching Function; Spatial Spillovers; Spatial Econometrics; Función de Emparejamiento; Efectos Espaciales; Econometría Espacia;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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