Regional Matching Frictions and Aggregate Unemployment

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

ERSA conference papers from European Regional Science Association

Abstract: The study shows 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 finds notable and time-wise stable differences in the matching efficiency across travel-to-work areas in Finland. If all areas were as efficient as the most efficient one, the number of hires would increase about 40 per cent. This would decrease the aggregate unemployment rate from the current 8.5 percent 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.

Date: 2006-08
New Economics Papers: this item is included in nep-geo and nep-lab
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Regional Matching Frictions and Aggregate Unemployment (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwrsa:ersa06p416

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