Labor mobility within Japanese regional labor markets and spillover effects
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Labor mobility within Japanese regional labor markets and spillover effects Nasser Dine Mohamedou1 Received: 6 January 2019 / Revised: 26 August 2020 / Accepted: 26 August 2020 © Japanese Economic Association 2020
Abstract This paper re-estimates the regional job-matching function using annual panel data covering 47 Japanese prefectures from 1987 to 2013, controlling for spillovers and agglomeration effects across prefectures, in addition to prefecture-level labor market determinants and prefecture and time fixed effects. The estimates reveal that the number of job matches rises together with rising stocks of unemployed and vacancies within and across prefectures suggesting significant spillover effects. A model comparison shows that the spatial spillovers are best captured using a contiguity weight matrix and are restricted to the local labor markets. Finally, the estimates of the matching function in different periods indicate that job seekers have substantially shifted their job-search behavior over time. Keywords Regional labor markets · Spillover effects · Matching function · Spatial weight matrix JEL Classification J60 · J61 · J62 · J64 · R23
1 Introduction Labor mobility is a key factor in tackling the regional dispersion of unemployment. Regional labor markets are geographically demarcated areas within national labor market, and inter-regional labor mobility determines the level of local labor markets integration. The relation between unemployment and available job openings can be captured through a “matching function”, a function that takes unemployment and vacancies as input and returns the number of matches formed per unit of time. A substantial body of literature explores the matching function at an aggregate level (Pissarides 2000; Petrongolo and Pissarides 2001). However, the job-creation process takes place at a more disaggregated level. In fact, Manning and Petrongolo * Nasser Dine Mohamedou [email protected]; [email protected] 1
Osaka University, Suita, Japan
13
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The Japanese Economic Review
(2017) argue that labor markets, where the creation of employment takes place, are “quite local”. The job-matching process is influenced by the local number of job seekers and openings within a specific region. In addition, as a result of increasing labor mobility, the number of job matches is also influenced by the situation in neighboring regions (Burda and Profit 1996; Burgess and Profit 2001; Fahr and Sunde 2006). Burda and Profit (1996) introduce a job-searching model that empirically examines the matching function by accounting for certain external factors. This model includes the number of “foreign” vacancies and unemployment numbers, and they show that the Czech Republic’s local labor markets are affected by neighboring districts’ labor markets condition. Although Boeri and Scarpetta (1996) argue that the instability in the matching process is due to the heterogeneity of the industrial structure, Burda and Profit (1996) provide a spatial interpretation. The
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