Labor market heterogeneity and the aggregate matching function

Régis Barnichon and Andrew Figura

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: The matching function -a key building block in models of labor market frictions- implies that the job finding rate depends only on labor market tightness. We estimate such a matching function and find that the relation, although remarkably stable over 1967-2007, broke down spectacularly after 2007. We argue that labor market heterogeneities are not fully captured by the standard matching function, but that a generalized matching function that explicitly takes into account worker heterogeneity and market segmentation is fully consistent with the behavior of the job finding rate. The standard matching function can break down when, as in the Great Recession, the average characteristics of the unemployed change too much, or when dispersion in labor market conditions -the extent to which some labor markets fare worse than others- increases too much.

Keywords: job finding; aggregate; composition; dispersion (search for similar items in EconPapers)
JEL-codes: E24 E32 J6 (search for similar items in EconPapers)
Date: 2010-10, Revised 2013-09
New Economics Papers: this item is included in nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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Related works:
Journal Article: Labor Market Heterogeneity and the Aggregate Matching Function (2015)
Working Paper: Labor Market Heterogeneity and the Aggregate Matching Function (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1395

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