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CEP discussion paper
Externalities in the Matching of Workers and Firms in Britain
Simon Burgess and Stefan Profit
April 2001
Paper No' CEPDP0490:
Full Paper (pdf)

JEL Classification: E24; J64

Tags: matching model; externalities; spatial dependence; unemployment outflows

We provide empirical evidence on the nature of spatial externalities in a matching model for the UK. We use a monthly panel of outflows, unemployment and vacancy stocks data from the registers at Jobcentres in the UK; these are mapped on to travel-to-work areas. We find evidence of significant spill-over effects that are generally in line with the predictions of theory. For example, we find that conditional on local labour market conditions, high unemployment levels in neighbouring areas raise the number of local filled vacancies but lower the local outflow from unemployment.