Hutter, Christian and Weber, Enzo (2017) Mismatch and the Forecasting Performance of Matching Functions. OXFORD BULLETIN OF ECONOMICS AND STATISTICS, 79 (1). pp. 101-123. ISSN 0305-9049, 1468-0084
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This paper investigates the role of structural imbalance between job seekers and job openings for the forecasting performance of a labour market matching function. Starting from a Cobb-Douglas matching function with constant returns to scale (CRS) in each frictional micro market shows that on the aggregate level, a measure of mismatch is a crucial ingredient of the matching function and hence should not be ignored for forecasting hiring figures. Consequently, we allow the matching process to depend on the level of regional, qualificatory and occupational mismatch between unemployed and vacancies. In pseudo out-of-sample tests that account for the nested model environment, we find that forecasting models enhanced by a measure of mismatch significantly outperform their benchmark counterparts for all forecast horizons ranging between one month and a year. This is especially pronounced during and in the aftermath of the Great Recession where a low level of mismatch improved the possibility of unemployed to find a job again. The results show that imposing CRS helps improve forecast accuracy compared to unrestricted models.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | LABOR-MARKET; PREDICTIVE ACCURACY; NESTED MODELS; TIME-SERIES; UNEMPLOYMENT; SEARCH; TESTS; |
| Subjects: | 300 Social sciences > 330 Economics |
| Divisions: | Business, Economics and Information Systems > Institut für Volkswirtschaftslehre und Ökonometrie > Lehrstuhl für Empirische Wirtschaftsforschung, insbesondere Makroökonomie und Arbeitsmarkt (Prof. Dr. Enzo Weber) |
| Depositing User: | Dr. Gernot Deinzer |
| Date Deposited: | 14 Dec 2018 13:01 |
| Last Modified: | 12 Feb 2019 08:52 |
| URI: | https://pred.uni-regensburg.de/id/eprint/498 |
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