Labor Market Heterogeneity and the Aggregate Matching Function

By Regis Barnichon, Andrew Figura. 2015

181 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Public Administration, Statistics and Probability

View Paper: https://www.semanticscholar.org/paper/ce9237e6eba70da908096a278e5d5d8abc3299ae

Citations in the corpus

• Mismatch Unemployment and the Geography of Job Search (2018, unknown): “, 2014; Herz and Van Rens, 2015) and the e ciency of the matching function (e.g. Barlevy, 2011; Veracierto, 2011; Davis et al., 2012; Barnichon and Figura, 2013) during and after the Great Recession.”