Disaggregating the Matching Function

49 Pages Posted: 2 Feb 2017

See all articles by Peter A. Diamond

Peter A. Diamond

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Aysegul Sahin

Federal Reserve Bank of New York

Multiple version iconThere are 3 versions of this paper

Date Written: December 2016

Abstract

The aggregate matching (hiring) function relates gross hires to labor market tightness. Decompositions of aggregate hires show how the hiring process differs across different groups of workers and of firms. Decompositions include employment status in the previous month, age, gender and education. Another separates hiring between part-time and full-time jobs, which show different patterns in the current recovery. Shift-share analyses are done based on industry, firm size and occupation to show what part of the residual of the aggregate hiring function can be explained by the composition of vacancies. The hiring process appears to shift as a recovery starts, coinciding with shifts in the Beveridge curve. The paper also discusses some issues in the modeling of the labor market.

Keywords: Beveridge curve, unemployment matching function, hiring function, vacancies, worker flows

JEL Classification: E240, J600

Suggested Citation

Diamond, Peter A. and Sahin, Aysegul, Disaggregating the Matching Function (December 2016). CESifo Working Paper Series No. 6266. Available at SSRN: https://ssrn.com/abstract=2910265

Peter A. Diamond (Contact Author)

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Aysegul Sahin

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