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Re-employment Probabilities and Returns to Matching

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  • Barbara Petrongolo

Abstract

The assumption of constant returns in the matching function, embodied in most bilateral search models, is crucial to ensure the uniqueness of the unemployment rate along a steady state growth path. This paper explores whether this is an acceptable assumption by estimating individual re-employment probabilities on a sample of entrants into unemployment. This is done by applying hazard models to survey data on both completed and uncompleted unemployment durations. The hypothesis of constant returns to matching is not rejected, on the basis of the evidence that the job-finding hazard only depends on local labour market tightness, and it is independent of its size.

Suggested Citation

  • Barbara Petrongolo, 1998. "Re-employment Probabilities and Returns to Matching," CEP Discussion Papers dp0406, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0406
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    References listed on IDEAS

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    1. Gregg, Paul & Wadsworth, Jonathan, 1996. "How Effective Are State Employment Agencies? Jobcentre Use and Job Matching in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 443-467, August.
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    7. Warren, Ronald Jr., 1996. "Returns to scale in a matching model of the labor market," Economics Letters, Elsevier, vol. 50(1), pages 135-142, January.
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    Cited by:

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    2. Bruder, Jana & Frosch, Katharina, 2006. "Foreign nationality and age: A double drawback for reemployment in Germany?," Thuenen-Series of Applied Economic Theory 63, University of Rostock, Institute of Economics.
    3. 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.
    4. Carolina Fugazza, 2012. "Employment Risk over the Life Cycle," Carlo Alberto Notebooks 280, Collegio Carlo Alberto.
    5. Fugazza Carolina, 2019. "Anatomy of Non-Employment Risk," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(3), pages 1-19, July.
    6. Luis Eduardo Arango & Ana María Ríos, 2015. "Duración del desempleo en Colombia: género, intensidad de búsqueda y anuncios de vacantes," BORRADORES DE ECONOMIA 012528, BANCO DE LA REPÚBLICA.
    7. Sorm, Vit & Terrell, Katherine, 2000. "Sectoral Restructuring and Labor Mobility: A Comparative Look at the Czech Republic," Journal of Comparative Economics, Elsevier, vol. 28(3), pages 431-455, September.
    8. Luis Eduardo Arango & Ana María Ríos, 2015. "Duración del desempleo en Colombia: género, intensidad de búsqueda y anuncios de vacantes," Borradores de Economia 12528, Banco de la Republica.
    9. Carolina Fugazza, 2018. "Anatomy of Unemployment Risk," Working papers 048, Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    10. Yudai Higashi, 2020. "Effects of region-specific shocks on labor market tightness and matching efficiency: evidence from the 2011 Tohoku Earthquake in Japan," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(1), pages 193-219, August.
    11. Frosch, Katharina, 2006. "Reemployment rates over the life course: Is there still hope after late career job loss?," Thuenen-Series of Applied Economic Theory 64, University of Rostock, Institute of Economics.
    12. Di Addario, Sabrina, 2011. "Job search in thick markets," Journal of Urban Economics, Elsevier, vol. 69(3), pages 303-318, May.
    13. Sabrina Di Addario, 2005. "Job Search in Thick Markets: Evidence from Italy," Economics Series Working Papers 235, University of Oxford, Department of Economics.
    14. Rafael Fearne & Ian Borg, "undated". "The characteristics associated with the short and long-term unemployed in the Maltese labour market," CBM Policy Papers PP/06/2021, Central Bank of Malta.
    15. Dario Sciulli & Antonio Menezes & José Vieira, 2012. "Unemployment Duration and Disability: Evidence from Portugal," Journal of Labor Research, Springer, vol. 33(1), pages 21-48, March.
    16. Yudai Higashi, 2020. "Urbanization Effects on Job Search Decision," Discussion Paper Series DP2020-26, Research Institute for Economics & Business Administration, Kobe University, revised Sep 2022.
    17. Mikko Moilanen, 2010. "Matching and settlement patterns: The case of Norway," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 607-623, August.
    18. Bjornstad, Roger, 2006. "Learned helplessness, discouraged workers, and multiple unemployment equilibria," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(3), pages 458-475, June.
    19. Lorenzo Corsini, 2011. "On Wealth, Unemployment Benefits and Unemployment Duration: some Evidence from Italy," Discussion Papers 2011/119, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    20. KAMBAYASHI Ryo & UENO Yuko, 2006. "Vacancy Market Structure and Matching Efficiency," ESRI Discussion paper series 160, Economic and Social Research Institute (ESRI).
    21. Roger Bjørnstad, 2001. "Learned Helplessness, Discouraged Workers, and Multiple Unemployment Equilibria in a Search Model," Discussion Papers 303, Statistics Norway, Research Department.
    22. Andrew Goodman-Bacon & Yukako Ono, 2007. "Who are temporary nurses?," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 31(Q I), pages 2-13.
    23. Sanna-Mari Ahtonen, 2004. "Matching across space: evidence from Finland," ERSA conference papers ersa04p205, European Regional Science Association.
    24. Sunde, Uwe, 2002. "Unobserved Bilateral Search on the Labor Market: A Theory-Based Correction for a Common Flaw in Empirical Matching Studies," IZA Discussion Papers 520, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • 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

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