Labor Market Heterogeneity and the Aggregate Matching Function

Régis Barnichon and Andrew Figura

American Economic Journal: Macroeconomics, 2015, vol. 7, issue 4, 222-49

Abstract: We estimate an aggregate matching function and find that the regression residual, which captures movements in matching efficiency, displays procyclical fluctuations and a dramatic decline after 2007. Using a matching function framework that explicitly takes into account worker heterogeneity as well as market segmentation, we show that matching efficiency movements can be the result of variations in the degree of heterogeneity in the labor market. Matching efficiency declines substantially when, as in the Great Recession, the average characteristics of the unemployed deteriorate substantially, or when dispersion in labor market conditions—the extent to which some labor markets fare worse than others—increases markedly. (JEL E24, E32, J41, J42)

JEL-codes: E24 E32 J41 J42 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/mac.20140116
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Citations: View citations in EconPapers (109)

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