Mismatch explanations of European unemployment : a critical evaluation

The peristence of European unemployment stands in striking contrast to the cyclical pattern of unemployment in the US. Many people attribute the rise in European unemployment to increased imbalances between the pattern of labour d¤ emand and supply - in other words, to greater mismatch, but existing mismatch indicators do not support this view. However, the obvious inference is not legitimate because the evidence is based on trended data, and thus gives rise¤to spurious statistical results. To get around the problem, the author uses the dynamic flow approach to structural unemployment and disaggregated data. The reader will find new results on ""non-spurious"" mismatch tendencies, occu¤ pational reallocation, the matching of apprentices, and the importance of matching and mobility for wage differentials. Keywords: Labour economics, Employment, Unemployment, Mismatch, Beveridge curve Contents: From the Contents: Introduction.- Do aggregate measures of mismatch measure mismatch? A time series analysis of existing concepts.- Disaggregate matching functions, spurious mismatch and occupational reallocation in Germ¤any.- Matching and new technologies: Does unmeasured ability explain the higher wages of new-technology workers?