Labor market of regular workers in Japan: A perspective from job advertisement data

We present an analysis of wages and labor market tightness for regular workers (full-time permanent workers) in Japan, utilizing a novel dataset of online job advertisements spanning the period from 2015 to 2022. Despite the importance of online job advertisements for the labor market, little has been studied for the case of Japan. Our study documents labor market conditions reflected in online job advertisement data and investigates how posted wages are related to the labor market tightness, and how they affect actual wages of existing workers. The results uncover several aspects of the labor market which are not captured by official statistics. First, we find that posted wages for regular workers increased at a pace faster than wages for existing regular workers in the sample period, with some heterogeneity across industries and skill requirements. Second, we find that the estimated job-filling rate observed from the dataset declined in recent years, which suggests difficulties that firms faced in hiring workers, and that this was associated with an increase in posted wages. Third, we find that an increase in posted wages positively affects the wages of existing regular workers after some time lag. Our empirical findings suggest that spillovers are driven by underlying mechanisms such as retention of existing workers, and fairness norms to maintain a balance in wages between newly hired workers and existing workers.