Vacancy Duration on Regional Labour Markets in the Netherlands

The focus of this paper is on the functioning of regional labour markets from a demandside perspective. In this respect, vacancy duration is the natural measure of the tightness of the (regional) labour market. The determinants of vacancy duration are studied in the context of a new theoretical model of employer's search behaviour. The model is empirically applied for the Netherlands by specifying its reduced form as a mixed proportional hazard model. Special attention is paid to the sensitivity of the estimation results for the specification of the base-line hazard (duration dependence) and the distribution of the errorterm (unobserved heterogeneity). The model is tested by means of an unique data set on employers' search behaviour. It is found that vacancy duration is considerably longer if a high educational level and/or specific work experience is required, indicating that there may exist a shortage of workers with specific qualifications on the Dutch labour market. The effect of the regional environment on vacancy duration appears to be less important than expected, whilst the use of advertisements as a search method for applicants has a large significant positive effect on vacancy duration. Finally, Dutch vacancies appear to be positive duration dependent which does not necessarily stem from an adjustment in the hiring Standard of employers, but may also be caused by the pattern of the arrivaland screening process of applicants.