Underestimated or overestimated: the matching function elasticities biased by worker inflows and outflows

Ewa Gałecka-Burdziak

Abstract


The matching function elasticities are biased, underestimated or overestimated, if we omit the job seekers inflows and outflows. I analyse mathematically the direction of this bias and estimate the parameters of random, stock-flow and job queuing models, handling econometrically for the temporal aggregation bias in the data. I examine various sets of endogenous and exogenous variables from registered unemployment data in Poland and Spain. In Poland, the unemployment influences more matching than discouragement. In Spain, the job offers determine the trade process. In both cases, the above-mentioned elasticities are underestimated if we neglect certain worker flows.


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DOI: http://dx.doi.org/10.17451/eko/47/2016/229

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