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The matching process before and after the crisis in the Netherlands

The matching process before and after the crisis in the Netherlands PurposeThe purpose of this paper is to explore the matching process before and after the Great Recession in the Netherlands. The Dutch case is interesting because it is characterised by increasing matching efficiency.Design/methodology/approachThis paper uses data from 2001 to 2014 to study the Dutch labour market matching process accounting for the three labour market states and their heterogeneities.FindingsThe elasticity of hires with respect to the short-term employed was significant, positive and countercyclical, while elasticities relating to new entrants were procyclical. The matching function (MF) displays constant returns to scale (CRTS) when using an alternative labour supply (LS) measure that includes the short-term employed as jobseekers. The findings are at odds with the idea of mismatch and a shortage of skills. Search frictions for employers were lower and vacancies were filled faster. This can be related to the fact that in a loose labour market context with increasing short-term employment, employers increase their hiring of employed workers which generates negative externalities on unemployed.Originality/valueThe implications concern the specification of the MF and the CRTS assumption when using unemployment as a LS measure. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Manpower Emerald Publishing

The matching process before and after the crisis in the Netherlands

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0143-7720
DOI
10.1108/IJM-10-2018-0329
Publisher site
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Abstract

PurposeThe purpose of this paper is to explore the matching process before and after the Great Recession in the Netherlands. The Dutch case is interesting because it is characterised by increasing matching efficiency.Design/methodology/approachThis paper uses data from 2001 to 2014 to study the Dutch labour market matching process accounting for the three labour market states and their heterogeneities.FindingsThe elasticity of hires with respect to the short-term employed was significant, positive and countercyclical, while elasticities relating to new entrants were procyclical. The matching function (MF) displays constant returns to scale (CRTS) when using an alternative labour supply (LS) measure that includes the short-term employed as jobseekers. The findings are at odds with the idea of mismatch and a shortage of skills. Search frictions for employers were lower and vacancies were filled faster. This can be related to the fact that in a loose labour market context with increasing short-term employment, employers increase their hiring of employed workers which generates negative externalities on unemployed.Originality/valueThe implications concern the specification of the MF and the CRTS assumption when using unemployment as a LS measure.

Journal

International Journal of Manpower – Emerald Publishing

Published: Nov 5, 2018

References

  • Is skill mismatch impeding US economic recovery?
  • Labour market heterogeneity and the aggregate matching function
  • Job searches, job matches and elasticity of matching
  • A model of competition between unemployed and employed job searchers: an application to the unemployment outflow rate in the UK
  • Search, flows, job creations and destructions
  • A test between stock–flow matching and the random matching function approach
  • Market places and matching
  • Market places and matching