Measuring the effect of matching problems on unemployment

Abstract

This article shows how matching problems reduce employment figures – and hence also raise those for unemployment – by creating a gap between labour demand and employment. It also shows how this gap can be measured by unfilled jobs (unmet demand) as distinct from job vacancies (recruitment processes) and reports results from the Swedish vacancy survey which measures both. In fact, while a shift of the matching function indicating longer recruitment times suggests increasing matching problems, this can only be verified by measuring unfilled jobs, which also quantifies the effect on unemployment.