Efficiency frontier and matching process on the labour market: Evidence from Tunisia

The purpose of this paper is to study the determinants of the inefficient functioning of the Tunisian labour market. The study takes advantage of the recent development in the stochastic frontier techniques and estimates, the matching function for Tunisia using disaggregated data. We include control variables as determinants of matching efficiency and regional disparities. We confirm that the persistently high rate of unemployment is the result of not only excess labour supply but is also related to a shortfall between supply and demand (sector, location, and qualification). ► Regional mismatch explains the persistence of unemployment at a high levels in Tunisia. ► The inefficiency of the matching process is an important cause of unemployment in Tunisia. ► The microeconomic approach is a useful tool to analyse unemployment in Tunisia. ► Increasing labour market flexibility has a negative impact on the matching process.