Mismatch Unemployment and Local Labour-Market Efficiency: The Role of Employer and Vacancy Characteristics

Abstract

Much of the theoretical and policy debate on local labour markets has focused upon improving the educational, training, and other ‘supply-side’ characteristics of job seekers. However, complementary employer ‘demand-side’ factors, in particular the characteristics of employers, job openings, and recruitment practices, are also important in local labour markets but have been relatively neglected in the literature. The authors investigate such factors and argue that job vacancies in an environment of high unemployment are not only the result of traditional ‘structural’ or ‘skill mismatch between local labour markets, but may result from a mismatch between employer and job-seeker expectations combined with an asymmetry of information between these groups, resulting in ‘frictional mismatch’ within local labour markets. Skill shortages can therefore be seen as a subset of wider recruitment difficulties. The authors survey a sample of employers to examine their characteristics, vacancies, and recruitment practices. The results provide evidence on the importance of employer and job factors on the flow of people into job vacancies. They also indicate that certain recruitment practices and inherent characteristics of vacancies and employers result in job offers that are either unattractive or inaccessible to the unemployed and hence increase the duration of job vacancies. It is argued that research into and design of local labour-market policies need to take more explicit account of the employer and job characteristics when discussing skill mismatch.