The matching efficiency of regional labor markets. A stochastic production function estimation: France 1990-1995

We evaluate the determinants of aggregate matching efficiency changes through a
stochastic translog production frontier model. The efficiency coefficient is represented by a stochastic
function of variables meant to capture workers and firms characteristics. The model is estimated on
French data covering twenty-two regions from March 1990 till February 1995. Our estimates suggest
that aggregate matching efficiency has decreased steadily in the early nineties. There are also wide
cross-regional differences. On average, about 30% of the variations of efficiency observed across
time and regions can be related to changes in the explanatory variables used in the model. The most
important explanatory variables are the proportion of youngsters, females and immigrants in the
stock of job seekers. Long-term unemployment has a significant negative effect, population density
a significant positive one. The huge decline in the proportion of permanent job offers has apparently
little effect on matching efficiency.