Regional Matching Frictions and Aggregate Unemployment

Aki Kangasharju (), Sanna-Mari Hynninen and Jaakko Pehkonen

No 383, Discussion Papers from VATT Institute for Economic Research

Abstract: This study demonstrates that a stochastic frontier approach applied to regional level data offers a convenient and interesting method to examine how regional differences in matching efficiency and structural factors contribute to aggregate unemployment. The study reveals notable and temporally stable differences in matching efficiency across travel-to-work areas in Finland. If all areas were as efficient as the most efficient one, the number of hirings would increase by about 40 per cent. This would reduce the aggregate unemployment rate from the current 8.5 per cent level to 6.0 per cent. If all the areas shared the same structural characteristics as the most favourable area, the aggregate unemployment rate would drop to 7.1 per cent.

Keywords: Efficiency; matching; aggregate unemployment; regional labour markets; Economic growth; Taloudellinen kasvu; Labour market; Työmarkkinat; Regional development; Aluekehitys; Effectiveness of public services; Julkisten palvelujen vaikuttavuus (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-geo, nep-lab and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.doria.fi/handle/10024/148362

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fer:dpaper:383

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Discussion Papers from VATT Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Anita Niskanen ().