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Duration Dependence of Job-Finding Rates in Japan

In: The Changing Japanese Labor Market

Author

Listed:
  • Akiomi Kitagawa

    (Tohoku University)

  • Souichi Ohta

    (Keio University)

  • Hiroshi Teruyama

    (Kyoto University)

Abstract

This chapter examines the negative duration dependence of the job-finding probabilityJob-finding probability in Japan by using officially collected data on individuals from the Labour Force SurveyLabour Force Survey for the period 2003 to 2012. Because the survey has limited informationUnemployment duration (spell) on unemployment duration, a survival analysisSurvival analysis is difficult to apply. We try to resolve this problem by adopting the bivariate probitBivariate probit estimation. We use information on the labor market status of the previous year to construct a proxy variable for the long-term unemployment experience. This variable is used to estimateJob-finding rate the job-finding rate. A long-term unemploymentLong-term unemployment equation is simultaneously estimated to deal with the problem of unobserved heterogeneity. After controlling for unobserved individual heterogeneityUnobserved individual heterogeneity of workers by using a bivariate probitBivariate probit specification, we find that long-term unemployment has a negative impact on the job-finding probabilityJob-finding probability for both men and women. This confirms the fact that the job-finding probability has a negative duration dependenceDuration dependence on unemployment in the Japanese labor market. On average, unemployment for a year or more reduces the job-finding probability by about 0.075 (roughly by half).

Suggested Citation

  • Akiomi Kitagawa & Souichi Ohta & Hiroshi Teruyama, 2018. "Duration Dependence of Job-Finding Rates in Japan," Advances in Japanese Business and Economics, in: The Changing Japanese Labor Market, chapter 0, pages 169-186, Springer.
    • Handle: RePEc:spr:advchp:978-981-10-7158-4_5
    DOI: 10.1007/978-981-10-7158-4_5
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