The Determinants of Hiring in Local Labor Markets: The Role of Demand and Supply Factors

Stefan Eriksson and Karolina Stadin ()
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Karolina Stadin: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

No 2011:19, Working Paper Series from Uppsala University, Department of Economics

Abstract: This paper studies the determinants of hiring. We use the search-matching model with imperfect competition in the product market from Carlsson, Eriksson and Gottfries (2011) to derive an equation for total hiring in a local labor market, and estimate it on Swedish panel data. When product markets are imperfectly competitive, product demand shocks have a direct effect on employment. Our results show that product demand is important for hiring. Moreover, we show that conventional measures of vacancies do not fully capture the effect of product demand on hiring. Finally, we show that the number of unemployed workers has a positive effect on hiring as predicted by search-matching models.

Keywords: Hiring; Search-matching; Imperfect Competition; Unemployment (search for similar items in EconPapers)
JEL-codes: E24 J23 J64 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2011-12-21
New Economics Papers: this item is included in nep-lab, nep-lma and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:uunewp:2011_019

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