In this paper we apply a stochastic frontier approach to examine how matching inefficiencies and regional disparities in structural factors contribute to regional and aggregate unemployment. Our results suggest that there would be a substantial decline in aggregate unemployment if (i) all local...

This paper takes a matching approach to local labour markets in Finland. The monthly data comprise 120 Local Labour Office areas over a 12 year period between January 1991 and August 2002. The basic matching function is extended to account for spatial spillovers across borders. The role of...