Twin peaks in regional unemployment and returns to scale in job-matching in the Czech Republic

The regional distribution of unemployment rates in the Czech Republic over the transition period is shown to be characterized by twin peaks, e.g. a high and a low unemployment equilibrium. The emer-gence of strong regional disparities at the beginning of the 1990s can, at least partially, be explained by regionally different degrees of competition between the emerging private sector and state-owned enterprises for skilled labor and the role of on-the-job transitions on the parameters of the matching function. This study presents a formalization of these effects and estimates empirical matching func-tions for a panel of labor market districts of the Czech Republic between January 1992 and July 1994. When time-series properties of unemployment to job exits are taken into account and dynamic panel estimators are applied, the Czech matching function is shown to exhibit increasing returns to scale, being consistent with multiple unemployment equilibria. Considering variables, which approximate the degree of job competition of employed workers in the search process, reveals strong heterogeneity of matching parameters with respect to the relative position of districts in the regional distribution of unemployment and vacancy rates, and the share of district employment in the private sector.

Externalities in the Matching of Workers and Firms in Britain

We provide empirical evidence on the nature of spatial externalities in a matching model for the UK. We use a monthly panel of outflows, unemployment and vacancy stocks data from the registers at Jobcentres in the UK; these are mapped on to travel-to-work areas. We find evidence of significant spill-over effects that are generally in line with the predictions of theory. For example, we find that conditional on local labour market conditions, high unemployment levels in neighbouring areas raise the number of local filled vacancies but lower the local outflow from unemployment.matching model, externalities, spatial dependence, unemployment outflows

Non-uniformity of job-matching in a transition economy- a nonparametric analysis for the czech republic

In this study, we explore the properties and development of the matching technology in the Czech Republic during the transition to a market economy. Nonparametric additive modelling allows us assess flexible functional forms, which comprise for instance CES and translog specifications. This enable us to evaluate the matching process locally for each combination of unemployment vacancies rather than being restricted to global coefficients. Special interest is devoted to analysis and economic determinants of regional variation in the returns to scale of the marching function. We find non-linearities in the partial adjustment process of unemployment outflows, and a negative coefficient on vacancies in some years. Moreover, we find locally increasing returns to scale in job-marching. Returns to scale are found to be negatively correlated to the share in employment in services and to outmigration, positively correlated to the employment share in industry, the unemployment rate and various measures of active labor market policies

Externalities in the matching of workers and firms in Britain

We provide empirical evidence on the nature of spatial externalities in a matching model for the UK. We use a monthly panel of outflows, unemployment and vacancy stocks data from the registers at Jobcentres in the UK; these are mapped on to travel-to-work areas. We find evidence of significant spill-over effects that are generally in line with the predictions of theory. For example, we find that conditional on local labour market conditions, high unemployment levels in neighbouring areas raise the number of local filled vacancies but lower the local outflow from unemployment

Differentiable comparative statics with payoff functions not differentiable everywhere

In this note we consider Cournot oligopoly. Due to the consideration of several consumers and/ or technologies, the profit function is not differentiable everywhere. We show that Cournot equilibrium never occurs in outputs where profit functions are not-differentiable. This result validates the procedure of differentiating profit functions to perform comparative statics in models where profit functions are not differentiable everywhere.Publicad

For-Profit Search Platforms

We consider optimal pricing by a profit-maximizing platform running a dynamic search and matching market. Buyers and sellers enter in cohorts over time, meet and bargain under private information. The optimal centralized mechanism, which involves posting a bid-ask spread, can be decentralized through participation fees charged by the intermediary to both sides. The sum of buyers’ and sellers’ fees equals the sum of inverse hazard rates of the marginal types and their ratio equals the ratio of buyers’ and sellers’ bargaining weights. We also show that a monopolistic intermediary in a search market may be welfare enhancing

Quality competition with profit constraints: Do non-profit firms provide higher quality than for-profit firms?

In many markets, such as education, health care and public utilities, firms are often profit-constrained either due to regulation or because they have non-profit status. At the same time such firms might have altruistic concerns towards consumers. In this paper we study semi-altruistic firms’ incentives to invest in quality and cost-reducing effort when facing constraints on the distribution of profits. Using a spatial competition framework, we derive the equilibrium outcomes under both quality competition with regulated prices and qualityprice competition. Profit constraints always lead to lower cost-efficiency, whereas the effects on quality and price are ambiguous. If altruism is high (low), profit-constrained firms offer higher (lower) quality and lower (higher) prices than firms that are not profit-constrained. Compared with the first-best outcome, the cost-efficiency of profit-constrained firms is too low, while quality might be over- or underprovided. Profit constraints may improve welfare and be a complement or substitute to a higher regulated price, depending on the degree of altruism.Profit constraints; Quality competition; Semi-altruistic providers.

Falling Profits, Rising Profit Margins, and the Full-Employment Profit Rate

macroeconomics, profit margins, profit rate