Re-Employment Probabilities and Returns to Matching

Barbara Petrongolo

No 2266, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Hazard Functions; Local Labour Markets; Returns To Matching (search for similar items in EconPapers)
JEL-codes: J63 J64 (search for similar items in EconPapers)
Date: 1999-10
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Citations: View citations in EconPapers (3)

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Working Paper: Re-employment Probabilities and Returns to Matching (1998)
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