Geographical and Occupational Mismatch in Finland over the Recent Era of Economic Crises: Estimates Using an Interconnected-Markets Approach

Abstract

In recent years, imbalances between labor demand and supply have increased in Finland, while the economy has been hit by several global and local shocks. We study how much of these imbalances can be explained by limitations in job seekers’ geographical and occupational mobility by applying an interconnected-markets mismatch index approach which relaxes strong assumptions regarding job search behavior imposed in previous longitudinal studies. Our results suggest that geographical and occupational mismatch have only accounted for a small percentage of the lost matches: their estimated total contribution was, on average, around 12 percent until 2014, after which we observe a decline towards 5 percent by 2021. The results indicate that this development is mainly explained by the increased concentration of job seekers and open vacancies in the same regions and occupational groups rather than by job seekers becoming more likely to accept distant jobs.

Publication Information

Uusitalo, V., Kauhanen, M., Nivala, A., & Suhonen, T. (2024), Geographical and Occupational Mismatch in Finland over the Recent Era of Economic Crises: Estimates Using an Interconnected-Markets Approach, Memorandum 1/2024, The Finnish Economic Policy Council.

• JEL: E24, J22, J23, J24, J61, J62, J63, R23
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