(In)Efficiency of Matching - the Case of a Post-transition Economy

This paper approaches the question of efficiency in job placement using regional data for Polish regions (policy-relevant NUTS 4 level) over the time span of 2000-2008. Using a unique data set we estimate the matching function using stochastic frontier as well as difference-in-difference estimators. We have also combined this unique data set with another unique source of data on the ALMPs coverage, unemployment structure across time and regions as well as the individual capacity of local labour offices. We use these data to explain the exceptional variation in estimated efficiency scores. Our findings suggest that matching abilities are highly driven by demand fluctuations, while unemployment structure, ALMPs and individual labour office capacities have little explanatory power. Although without individual data it is fairly impossible to provide a reliable counterfactual, we raise some arguments to support the claim of job placement inefficiency by public employment services in Poland.