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Analysis of Changes in Japan's Unemployment Rate Using Gross Flow Data

Author

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  • Kuroda, Sachiko

    (Institute for Monetary & Econ Studies, Bank of Japan)

Abstract

Using the flow data between the three states of employment, unemployment and not-in-the-labor-force, I undertook a detailed examination of factors contributing to changes in Japans unemployment rate. The results of the analysis provide the following explanations for Japans rising unemployment rate since 1991. First, the transition probability from employment to unemployment has risen, and at the same time the transition rate from unemployment to employment has declined significantly. Second, the transition probability from unemployment to not-in-the-labor-force has declined for both men and women, resulting in the accumulation of unemployment. Third, the results point to the possibility that the unemployment rate was also pushed up by the flow of workers from not-in-the-labor force to unemployment. Parallel to a decline in the transition probability from not-in-the-labor-force to employment, an increased inflow of men from not-in-the-labor-force to unemployment began in the mid-1990s. The same trend is observable for women beginning between the end of the 1990s and 2000. Next, I estimated the Phillips curve using the flow data as a source of additional information for forecasting price trends. The results indicate that the forecasting performance of the Phillips curve can in fact be improved by using flow data between employment and unemployment that are sensitive to trends in price levels and business conditions.

Suggested Citation

  • Kuroda, Sachiko, 2003. "Analysis of Changes in Japan's Unemployment Rate Using Gross Flow Data," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(1), pages 69-104, February.
  • Handle: RePEc:ime:imemes:v:21:y:2003:i:1:p:69-104
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    Cited by:

    1. Yoichi AraiAuthor-Name: Hidehiko Ichimura & Daiji Kawaguchi, "undated". "The educational upgrading of Japanese youth, 1982-2007: Are Japanese youth ready for structural reforms?," Working Papers e78, Tokyo Center for Economic Research.
    2. 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.
    3. Scott M. Fuess, 2010. "Job Centers: Are Finders Keepers? A Note From Japan," Contemporary Economic Policy, Western Economic Association International, vol. 28(1), pages 136-143, January.
    4. Kuroda, Sachiko & Yamamoto, Isamu, 2003. "The Impact of Downward Nominal Wage Rigidity on the Unemployment Rate: Quantitative Evidence from Japan," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(4), pages 57-85, December.
    5. Arai, Yoichi & Ichimura, Hidehiko & Kawaguchi, Daiji, 2015. "The educational upgrading of Japanese youth, 1982–2007: Are all Japanese youth ready for structural reforms?," Journal of the Japanese and International Economies, Elsevier, vol. 37(C), pages 100-126.
    6. Miyamoto, Hiroaki, 2011. "Cyclical behavior of unemployment and job vacancies in Japan," Japan and the World Economy, Elsevier, vol. 23(3), pages 214-225.
    7. Lin, Ching-Yang & Miyamoto, Hiroaki, 2012. "Gross worker flows and unemployment dynamics in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 26(1), pages 44-61.
    8. Brian Silverstone & Will Bell, 2011. "Gross Labour Market Flows in New Zealand: Some Questions and Answers," Working Papers in Economics 11/15, University of Waikato.

    More about this item

    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

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