DP1364 Matching Across Space: Evidence on Mobility in the Czech Republic

Author(s): Michael C Burda, Stefan Profit
Publication Date: March 1996
Keyword(s): Czech Republic, Matching Function, Regional Mobility, Spatial Interactions
JEL(s): J41, J61, J64
Programme Areas: Human Resources
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1364

The increase in dispersion of regional unemployment in the Czech Republic, despite low overall joblessness, is suggestive of low labour mobility. At the same time, standard matching functions estimated with district level panel data exhibit spatial instability. A simple model of non-sequential search with endogenous search intensity can link this instability to spatial interdependence in matching, inducing complex functional forms and non-constant returns to scale. We find a statistically significant non-uniform impact of surrounding districts on local matching, even after controlling for boundaries and sectoral heterogeneity. Constant returns for this modified matching function cannot, however, be rejected in most cases.