Re-employment Probabilities and Returns to Matching
Paper No' CEPDP0406:
Save Reference as: BibTeX File | EndNote Import File
Is hard copy/paper copy available?
YES - Paper Copy Still In Print.
This Paper is published under the following series:
CEP Discussion Papers
Google Bookmarks |
The assumption of constant returns in the matching function, embodied in most bilateral search models, is crucial to ensure the uniqueness of the unemployment rate along a steady state growth path. This paper explores whether this is an acceptable assumption by estimating individual re-employment probabilities on a sample of entrants into unemployment. This is done by applying hazard models to survey data on both completed and uncompleted unemployment durations. The hypothesis of constant returns to matching is not rejected, on the basis of the evidence that the job-finding hazard only depends on local labour market tightness, and it is independent of its size.