Randomness or stock–flow: which mechanism describes labour market matching in Poland?

Ewa Gałecka-Burdziak

doi:10.1080/1406099x.2017.1344481

Abstract

ABSTRACTI identify which theoretical model (random, stock–flow, or job queuing) best describes the matching mechanism in the labour market in Poland. The purpose of this work is to formulate policy recommendations aimed at increasing the number of matches. I use monthly registered unemployment data for the period January 1999–June 2013 and econometrically correct for temporal aggregation bias in the data. I extend known solutions and apply them directly to a job queuing model. Job seekers (from the pool) seek work among old and new job posts, but only a small fraction of the newly unemployed individuals find work quickly. Vacancies are the driving force in aggregate hiring, but the inflow is more important than the stock. The random model has greater explanatory power, although the results do not negate the non-random model. Hence, better information and higher inflows (especially of job offers) should facilitate matching.

Highlights

I compare labour market matching mechanisms, random and stock-flow, to determine which one prevails in the Polish labour market
I explicitly address the nature of matching technology while econometrically addressing the temporal aggregation bias in the data
If we identify the matching technology, we can formulate policy recommendations to improve the efficiency of the matching process

Summary

Introduction

I compare labour market matching mechanisms, random and stock-flow, to determine which one prevails in the Polish labour market. I explicitly address the nature of matching technology while econometrically addressing the temporal aggregation bias in the data. This approach produces robust results and indicates the relative importance of stocks and flows in the employment creation process. I use data on public employment intermediation in the Polish labour market. A relatively small fraction of companies publishes vacancies in the public employment offices (approximately 16.5% in 2012). This remains the most common job search method among job seekers (approximately 70% of job seekers contact a public employment office)

Results

Discussion

Conclusion