Working Paper: NBER ID: w20939
Authors: Robert E. Hall; Sam Schulhofer-Wohl
Abstract: Matching efficiency is the productivity of the process for matching jobseekers to available jobs. Job-finding is the output; vacant jobs and active jobseekers are the inputs. Measurement of matching efficiency follows the same principles as measuring an index of productivity of production. We develop a framework for measuring matching productivity when the population of jobseekers is heterogeneous. The efficiency index for each type of jobseeker is the monthly job finding rate for the type adjusted for the overall tightness of the labor market. We find that overall matching efficiency declined smoothly over the period from 2001 through 2013. Measures of matching efficiency that neglect heterogeneity among the unemployed and also neglect jobseekers other than the unemployed suggest a 23 percent decline in efficiency between 2007 and 2009. We demonstrate that essentially all of this apparent decline results from changes in the composition of jobseekers rather than any true movement in efficiency. We also develop a new approach to measuring matching rates that avoids counting short-duration jobs as job-seeking successes.
Keywords: No keywords provided
JEL Codes: E24; J63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| decline in matching efficiency (C78) | higher unemployment (J64) |
| composition of jobseekers (J68) | observed shifts in unemployment (J64) |
| matching efficiencies of jobseekers (J68) | matching efficiency (C52) |
| 2001-2013 (N22) | decline in overall matching efficiency (C78) |
| 2007-2009 (N22) | significant decline in matching efficiency (C78) |
| labor market tightness (J20) | jobfinding rates (J68) |