The Matching Process and Regional Disparities. An Efficiency Analysis of the Swedish Labour Market.

Abstract

This thesis investigates the matching process between unemployed and unfilled vacancies in Swedish regional labour markets. Using a stochastic production frontier analysis, we are able to study differences in matching efficiency between regions and changes in overall matching efficiency over time. We use monthly labour market data from the Swedish Public Employment Service for time period 2006 to 2016. Our results suggest that more densely populated counties, on average, have lower matching efficiency than less densely populated counties. We also find that matching efficiency has deteriorated during the research period. Further, the deterioration is robust across all 21 counties. This is consistent with the public belief about a persistent decline in Swedish labour market efficiency after the financial crisis 2008. However, there is no visual evidence of an increase in the negative trend in conjunction with the crisis. This indicates that the deterioration in matching efficiency probably started prior to the crisis.