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Estimating Matching Efficiency with Variable Search Effort

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  • Andreas Hornstein
  • Marianna Kudlyak

Abstract

We introduce a simple representation of endogenous search effort into the standard matching function with job-seeker heterogeneity. Using the estimated augmented matching function, we study the sources of changes in the average employment transition rate. In the standard matching function the contribution of market tightness (matching efficiency) is increasing (decreasing) in the matching function elasticity. For our augmented matching function search effort is pro-cyclical for small matching elasticity and accounts for most of the transition rate volatility, with small contributions from market tightness and matching efficiency. For a large matching elasticity search effort is strongly counter-cyclical and large movements in matching efficiency compensate for that. Regardless of the matching elasticity, we find a substantial decline of the matching efficiency after 2007.

Suggested Citation

  • Andreas Hornstein & Marianna Kudlyak, 2015. "Estimating Matching Efficiency with Variable Search Effort," Working Paper Series 2016-24, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:2016-24
    DOI: 10.24148/wp2016-24
    Note: This Draft: December 6, 2016. First Draft: May 21, 2015
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    Cited by:

    1. Wolcott, Erin L., 2021. "Employment inequality: Why do the low-skilled work less now?," Journal of Monetary Economics, Elsevier, vol. 118(C), pages 161-177.
    2. Kohlbrecher, Britta & Merkl, Christian, 2022. "Business cycle asymmetries and the labor market," Journal of Macroeconomics, Elsevier, vol. 73(C).
    3. Joonbae Lee & Hanna Wang, 2021. "Ranking and Search Effort in Matching," Working Papers 1242, Barcelona School of Economics.
    4. Alessandro Gavazza & Simon Mongey & Giovanni L. Violante, 2018. "Aggregate Recruiting Intensity," American Economic Review, American Economic Association, vol. 108(8), pages 2088-2127, August.
    5. Hairault, Jean-Olivier & Langot, Francois & Sopraseuth, Thepthida, 2019. "Unemployment fluctuations over the life cycle," Journal of Economic Dynamics and Control, Elsevier, vol. 100(C), pages 334-352.
    6. Hairault, Jean-Olivier & Langot, Francois & Sopraseuth, Thepthida, 2019. "Unemployment fluctuations over the life cycle," Journal of Economic Dynamics and Control, Elsevier, vol. 100(C), pages 334-352.
    7. M Alper Çenesiz & Luís Guimarães, 2022. "The cyclicality of job search effort in matching models [Labor supply in the past, present, and future: a Balan ced-Growth perspective]," Oxford Economic Papers, Oxford University Press, vol. 74(4), pages 1195-1213.
    8. Hartl, Tobias & Hutter, Christian & Weber, Enzo, 2021. "Matching for three: big data evidence on search activity of workers, firms, and employment service," IAB-Discussion Paper 202101, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • 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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