Working Paper: CEPR ID: DP2409
Authors: Barbara Petrongolo; Christopher A. Pissarides
Abstract: We survey the microfoundations, empirical evidence and estimation issues underlying the aggregate matching function. Several microeconomic matching mechanisms have been suggested in the literature with some successes but none is generally accepted as superior to all others. Instead, an aggregate matching function with hires as a function of vacancies and unemployment has been successfully estimated for several countries. The Cobb-Douglas restrictions with constant returns to scale perform well. Recent work has utilized disaggregated data to go beyond aggregate estimates, with many refinements and suggestions for future research.
Keywords: matching function; search; mismatch; Beveridge curve; coordination failures; stock-flow matching; ranking; on-the-job search; space aggregation; time aggregation
JEL Codes: E21; J60; J63; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| aggregate matching function (C43) | hires (M51) |
| vacancies (J63) | hires (M51) |
| unemployment (J64) | hires (M51) |
| frictions (D74) | hires (M51) |
| unemployment insurance (J65) | matching rates (C52) |
| age structure of labor force (J21) | matching rates (C52) |
| frictions (D74) | matching function (C78) |
| matching function (C78) | unemployment (J64) |