The Hiring Function in Local Labour Markets in Britain

The labour market hiring function is estimated in the 104 areas of Training and Enterprise Councils (TECs) and Local Enterprise Companies (LECs) that cover Britain. The model gives good overall fit with a general pattern evidencing constant returns to scale between unemployment and vacancies. Important variations occur between local TEC/LEC areas, particularly for islands, the City of London, suburban commuter areas, and coalfields or other areas suffering steep rises in redundancies. The estimates suggest that there is a linear aggregation between the local and national level. It is also concluded that the present boundaries of TEC/LEC areas should be reviewed, particularly in metropolitan areas, or that government contracts should give a strong emphasis to TECs or LECs working more closely together in these areas.