Estimating vacancies from firms’ hiring behavior: The case of a developing economy

Abstract

We propose a procedure that allows recovering an estimate of vacancies from firms’ information on hires and separations. Using estimated vacancies, we analyze the aggregated behavior of vacancies for the Colombian labor market. In addition, we estimate matching functions to conclude that the matching formation process for the Colombian labor market is random; this finding support the idea that frictions are mainly due to informational restrictions, and not explained by a structural mismatch. Our method might be useful in developing economies, where there are no good official sources of information on the matter.