Working Paper Series,
Stockholm University, Swedish Institute for Social Research

Abstract: How can vacancy statistics be used to measure friction in job matching and the effects of friction on unemployment? First, measure deviations from instantaneous hirings by the average duration of recruitment as measured by the number of job vacancies divided by the number of hirings per month. Second, measure direct effects of recruitment times on employment by measuring unfilled jobs, defined as unoccupied job vacancies which are available immediately. Third, measure indirect effects of recruitment times on employment by estimating first the effect of recruitment times on product prices and then the effect of a price change on sales, production and employment. Fourth, measure ‘search ineffectiveness’ with potential effects on the NAIRU by the rate of unfilled jobs.

Keywords: Unemployment; vacancies; matching function; labour demand; friction

JEL-codes: J63; J64

37 pages, November 20, 2009

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