Disaggregating the Matching Function
The aggregate matching (hiring) function relates gross hires to labor market tightness. Decompositions of aggregate hires show how the hiring process differs across different groups of workers and of firms. Decompositions include employment status in the previous month, age, gender and education. Another separates hiring between part-time and full-time jobs, which show different patterns in the current recovery. Shift-share analyses are done based on industry, firm size and occupation to show what part of the residual of the aggregate hiring function can be explained by the composition of vacancies. The hiring process appears to shift as a recovery starts, coinciding with shifts in the Beveridge curve. The paper also discusses some issues in the modeling of the labor market.
We thank Sam Kapon and Rachel Schuh for excellent research assistance. The views expressed in this paper are solely the responsibility of the authors and should not be interpreted as reflecting views of the Federal Reserve Bank of New York, any other person associated with the Federal Reserve System, or the National Bureau of Economic Research.