Proceedings of The 2nd World Conference on Management, Business, and Economics
The Albanian Labour Market through the Lens of the Matching Function: Quo Vadis Albania?
This paper provides the first attempt to study the dynamics of the Albanian labour market through the lens of the empirical matching function, by simultaneously taking into consideration both sides of the matching process: the demand side represented by firms with job openings and the supply side represented by unemployed job seekers. In this regard the aim of this paper is three-fold: First, to provide an assessment of labour market conditions in Albania in terms of unfilled vacancies and unemployed workers. Second, an examination of the job finding rate developments in Albania since the aftermath of the last recession. Third, provide a measure of the extent of externalities in the Albanian labour market and their implications for the job finding rate. In addition, by relying on a Cobb-Douglas matching function with constant returns to scale and data that cover a time period from 2010:Q1-2020:4 obtained from the National Agency for Employment and Skills, I am able to model the two-sided search and matching process that takes place between firms with job openings and unemployed workers in Albania. The findings reveal a significant negative congestion externality caused by the pool of unemployed on the job finding probability of an unemployed job seeker in Albania which results bigger than the congestion effects caused by firms on each other.
keywords: matching function, search and matching process, labour market.