Matching in the labour market: modelling spatial aspects of the Swedish unemployment benefit rules

In this paper, some consequences of the Swedish unemployment benefit rules are studied. This is achieved by introducing geographical mobility into a labour market matching model. Jobseekers and vacancies are unevenly distributed across space. Therefore, both the probability that a jobseeker will find a job and the probability that a vacancy is filled during a period vary across locations. Moreover, these differences are followed by spatial differences in both the duration of unemployment and vacancy times. It is shown that the potential of geographical mobility to increase the number of matches is limited in a labour market with few or many vacancies per jobseeker. In these labour markets, mobility mostly affects which jobseekers find a job during a period. In a relatively better balanced labour market, the number of matches could be increased by additional mobility.