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Life-cycle search, match quality and Japan’s labor market

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  • Esteban-Pretel, Julen
  • Fujimoto, Junichi

Abstract

The Japanese labor market has been experiencing considerable transformations over the recent decades. We analyze the implications of some of these actual and potential transformations, whose impact may not be homogeneous across workers of different ages. We first develop a life-cycle search and matching model which incorporates random match quality as well as elements capturing important institutional features of the Japanese economy. Our model is consistent with the life-cycle properties of Japan’s labor market, namely that the job separation and unemployment rates are U-shaped, whereas the job finding rate declines with age. We then conduct three experiments that are relevant to Japan: a decline in productivity, a removal of the firing costs, and a decline in the population growth. In the first two experiments, we find substantial changes to these three rates, where young workers tend to be the most affected. We observe, however, a very small labor market impact in the third experiment.

Suggested Citation

  • Esteban-Pretel, Julen & Fujimoto, Junichi, 2012. "Life-cycle search, match quality and Japan’s labor market," Journal of the Japanese and International Economies, Elsevier, vol. 26(3), pages 326-350.
  • Handle: RePEc:eee:jjieco:v:26:y:2012:i:3:p:326-350
    DOI: 10.1016/j.jjie.2012.06.003
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    References listed on IDEAS

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    Cited by:

    1. Esteban-Pretel, Julen & Tanaka, Ryuichi & Meng, Xiangcai, 2017. "Changes in Japan’s labor market during the Lost Decade and the role of demographics," Journal of the Japanese and International Economies, Elsevier, vol. 43(C), pages 19-37.
    2. Lin, Ching-Yang & Miyamoto, Hiroaki, 2014. "An estimated search and matching model of the Japanese labor market," Journal of the Japanese and International Economies, Elsevier, vol. 32(C), pages 86-104.
    3. Fujita, Shigeru & Fujiwara, Ippei, 2016. "Declining Trends In The Real Interest Rate And Inflation: The Role Of Aging," Working Papers 16-29, Federal Reserve Bank of Philadelphia.
    4. Ryuta Ray Kato & Hiroaki Miyamoto, 2015. "Effects of Fiscal Stimulus on the Labor Market," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 11(2), pages 277-302, March.
    5. repec:bpj:bejmac:v:17:y:2017:i:1:p:38:n:5 is not listed on IDEAS
    6. Masanori Kashiwagi, 2015. "The Cyclical Properties of Unemployment and Vacancies in Taiwan," Pacific Economic Review, Wiley Blackwell, vol. 20(4), pages 588-607, October.

    More about this item

    Keywords

    Search and matching; Life-cycle; Overlapping generation; Match quality; Japan; Productivity decline;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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