Regional Dependencies in Job Creation: An Efficiency Analysis for Western Germany

34 Pages Posted: 21 Jul 2005

See all articles by Uwe Sunde

Uwe Sunde

Ludwig Maximilian University of Munich

Rene Fahr

University of Paderborn; IZA Institute of Labor Economics

Date Written: July 2005

Abstract

This paper investigates the efficiency of the matching process between job seekers and vacancy posting firms in West-Germany, using variation across labor market regions and across time. The results of a stochastic frontier analysis shed new light on extent and regional differences of search frictions, on potential determinants of frictional inefficiencies and on the consequences of German reunification for the matching process. The paper also presents novel evidence on the complex interactions between spatial contingencies among regional labor markets: matching efficiency decreases with spatial autocorrelation in hiring, implying indirect evidence for crowding externalities.

Keywords: regional unemployment, stochastic frontier, matching function, spatial autocorrelation

JEL Classification: J61, J64, J21, R12

Suggested Citation

Sunde, Uwe and Fahr, Rene, Regional Dependencies in Job Creation: An Efficiency Analysis for Western Germany (July 2005). IZA Discussion Paper No. 1660. Available at SSRN: https://ssrn.com/abstract=761565

Uwe Sunde

Ludwig Maximilian University of Munich ( email )

Geschwister-Scholl-Platz 1
Munich, Bavaria 80539
Germany

Rene Fahr (Contact Author)

University of Paderborn ( email )

Warburger Str. 100
D-33098 Paderborn
Germany
+49 5251 60 3692 (Phone)

HOME PAGE: http://www.quantitative-cg.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany
+49 228 38 94 0 (Phone)
+49 228 38 94 510 (Fax)

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