Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93075
Authors: 
Kohlbrecher, Britta
Merkl, Christian
Nordmeier, Daniela
Year of Publication: 
2014
Series/Report no.: 
Kiel Working Paper 1909
Abstract: 
Many labor market models use both idiosyncratic productivity and a vacancy free entry condition. This paper shows that these two features combined generate an equilibrium comovement between matches on the one hand and unemployment and vacancies on the other hand, which is observationally equivalent to a constant returns Cobb-Douglas function commonly used to model match formation. We use German administrative labor market data to show that the matching function correlation solely based on idiosyncratic productivity and free entry is very close to the empirical matching function. Consequently, we argue that standard matching function estimations are seriously biased if idiosyncratic productivity plays a role for match formation. In this case, they are not suitable for the calibration of labor market models.
Subjects: 
matching function
idiosyncratic productivity
job creation
vacancies
JEL: 
E24
E32
J63
J64
Document Type: 
Working Paper

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