Spatial spillover effects in the labour market in a middle-income country

Leonardo Morales (), Mauricio Quiñones, Eleonora Davalos and Luis-Felipe Gaviria

Spatial Economic Analysis, 2025, vol. 20, issue 1, 53-71

Abstract: Most macroeconomic labour literature on estimating matching functions does not consider spatial spillover effects. However, job search and vacancy-filling processes often involve neighbouring locations, as local workers can search for and fill vacancies in nearby labour markets. We estimate a spatial spillover model using annual data for a middle-income country in Latin America. Our findings show that unemployment has a positive spatial spillover effect because an increase in the labour supply raises the probability of filling a vacancy. In contrast, vacancies have a negative spillover effect because local and neighbouring vacancies compete to be filled by workers in both markets.

Date: 2025
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Working Paper: Spatial Spillover Effects in the Labor Market in a Middle-Income Country (2024)
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DOI: 10.1080/17421772.2024.2378792

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