Number:
1283
Published:
Classification JEL:
J61, J64, R12, R14
Keywords:
Matching Function, spatial spillovers, Spatial econometrics

The most recent
Luis E. Arango, Leonardo Bonilla-Mejía, Luz Adriana Flórez, Luis E. Arango
Julián Andrés Parra-Polanía, Constanza Martínez-Ventura
Edgar Caicedo-García, Jorge Enrique Ramos-Forero, Hernán Rincón-Castro, Hector Manuel Zárate-Solano
Abstract
Most macroeconomic labor literature on estimating matching functions does not consider spatial spillover effects. However, job search and vacancy-filling processes often involve neighboring locations, as local workers can search for and fill vacancies in nearby labor markets. We estimate a spatial spillover model using annual data for a middle-income country in Latin America. Our findings show that unemployment has a positive spatial spillover effect because an increase in the labor supply raises the probability of filling a vacancy. In contrast, vacancies have a negative spillover effect because local and neighboring vacancies compete to be filled by workers in both markets.