We estimate regional matching functions on NUTS 3 level (2000 - 2010) for Germany.
Spillovers account for 75% of the elasticity between unemployment and matches of 0.4.
The Spatial Durbin Error Model fits the data best, suggesting ‘local’ spillovers.
The results differ only slightly between nine different spatial weight matrices.
Major labor market reforms have increased the spatial mobility of the unemployed.