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Cyclical behavior of unemployment and job vacancies in Japan

  • Miyamoto, Hiroaki

This paper studies whether the Mortensen and Pissarides (MP) search and matching model can explain the observed labor market fluctuations in Japan. To do this, this study first establishes a number of key facts about the cyclical properties of the Japanese labor market. Although the standard MP model correctly predicts the observed regularities in the cyclical fluctuations of unemployment and job vacancies, it cannot generate the observed unemployment and vacancy fluctuations in response to productivity shock of reasonable size. This paper extends the matching model by incorporating firm-specific training costs whose role is emphasized in the Japanese labor market. Relative to the standard MP model, the extended model generates larger cyclical fluctuations in unemployment and job vacancies. However, it still falls short of what observed in the Japanese data.

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Article provided by Elsevier in its journal Japan and the World Economy.

Volume (Year): 23 (2011)
Issue (Month): 3 ()
Pages: 214-225

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Handle: RePEc:eee:japwor:v:23:y:2011:i:3:p:214-225
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505557

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  18. Dale T. Mortensen & Christopher A. Pissarides, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 397-415.
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