Labor Flows and the Aggregate Matching Function: A Network-Based Test Using Employer-Employee Matched Records
10 Pages Posted: 16 Jul 2015
Date Written: July 15, 2015
The assumption of aggregate matching functions in labor markets is tested using a network configuration model for directed multi-graphs. We use employer-employee matched records of the universe of employees and firms in Finland and find that aggregate matching functions, even at the level of submarkets, cannot explain the vast majority of the observed patterns of labor flows between firms. Our findings suggest the need for theoretical frameworks that take into account the structure of labor market frictions.
Keywords: aggregate matching function, labor mobility, networks, labor reallocation, frictions, micro-data, job search, configuration model, employer-employee matched records
JEL Classification: J01, J6, J63, J64, C12, D85
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