Labor Market of Regular Workers in Japan: A Perspective from Job Advertisement Data

We analyze labor market tightness and wages for regular workers in Japan, using online job advertisement big data from 2015 to 2022 (approximately 5.8 million samples). The analysis reveals several aspects of the labor market which cannot be captured by official statistics. First, the ratio of job postings matched to job applicants (job-filling rate) has been declining, which suggests that firms may be facing greater difficulties in hiring workers than indicated by macro indicators such as jobs-to-applicants ratio. Second, the decline in the job-filling rate is in part driven by an increase in skill requirements of firms. This is related to the observed acceleration in the accumulation of intangible assets, which has a complementary effect in raising demand for high skilled workers. Third, posted wages are clearly rising under tightening labor market conditions, driven by an increase in demand for high skilled workers. Fourth, an increase in posted wages spills over to average wages of regular workers with some time lag. As for this spillover mechanisms, our empirical results support the existence of (1) a channel in which firms raise wages in order to retain workers as it becomes easier for them to move to higher paying jobs, and (2) a channel in which firms raise wages for fairness consideration as newly hired workers are paid high wages within a firm.