The matching function

Abstract

"This paper reconsiders the matching function. In a first step, we estimate an aggregate matching function with German administrative data. Our results provide renewed evidence for a Cobb-Douglas matching function with constant returns to scale. Relying on restricted matching elasticities, we further show that it is important to control for various heterogeneities in the aggregate job finding rate. In a second step, we derive a simple labor selection model where vacancies do not have any aggregate effects, but appear as a worker attraction device. When we simulate this model for the German economy and estimate a matching function from the generated data, we also obtain evidence for a Cobb-Douglas function with constant returns to scale. In this fictional matching function, the elasticity of matches with respect to vacancies is a function of the exogenous contact probability. Thus, our paper suggests that the empirical evidence of the matching function may have a completely different interpretation." (Author's abstract, IAB-Doku) ((en))

Cite article

Kohlbrecher, B., Merkl, C. & Nordmeier, D. (2013): The matching function. A selection-based interpretation. (LASER discussion papers 70), Erlangen, 33 p.