Match efficiency and firms' hiring standards

Petr Sedlacek

Journal of Monetary Economics, 2014, vol. 62, issue C, 123-133

Abstract: During the last recession, new hires were lower than what would be predicted by a standard matching function and the observed ratio of searching workers and firms. This paper first estimates U.S. match efficiency as an exogenous residual in the matching function using a simple search and matching model. It finds match efficiency to be pro-cyclical and to account for about 1/4 of unemployment increases during the most severe recessions. Second, this paper proposes a model with endogenous separations and firing costs that endogenizes match efficiency, which is driven by firms’ hiring standards. The model can explain almost 1/2 of the variation in the initial estimate of match efficiency.

Keywords: Match efficiency; Estimation; Endogenous separations; Firms' hiring standards (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:62:y:2014:i:c:p:123-133

DOI: 10.1016/j.jmoneco.2013.10.001

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