engleski

The Efficiency of the Matching Process: Exploring the Impact of Regional Employment Offices in Croatia

This paper investigates the efficiency in job placement in Croatian labour market by estimating matching function on a regional level using the Croatian Employment Service data on a monthly basis over the 2000-2011 time period. The efficiency of the matching process is analysed via panel stochastic frontier estimation. Results suggest that the efficiency in the labour market is rising over time, with great variations across regions. Additionally, in order to get consistent estimates, first-difference transformation of the original panel stochastic frontier model is applied. However, preliminary results from this transformed model show that there are no major differences in estimated technical efficiency coefficients in comparison to the original panel stochastic frontier model. In order to explore regional variations in estimated technical efficiency coefficients structural characteristics of the labour market as well as some policy variables, like ALMPs coverage or regional CES office staff caseload, are included into the second-stage estimation. Even though most of the structural as well as policy variables proved to be significant, none of the estimated coefficients is large enough to explain high regional variations in matching efficiency. This indicates that matching (in)efficiency is highly determined by demand fluctuations. Nevertheless, being that the allocation of funds to regional employment offices is mostly driven by the absorption capacity of the respective office based on historical records, it is argued that in the future local needs should have larger weight when allocating funds to CES regional offices.

matching function; stochastic frontier; employment offices; efficiency; Croatia

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