Labor mobility within Japanese regional labor markets and spillover effects

This paper re-estimates the regional job-matching function using annual panel data covering 47 Japanese prefectures from 1987 to 2013, controlling for spillovers and agglomeration effects across prefectures, in addition to prefecture-level labor market determinants and prefecture and time fixed effects. The estimates reveal that the number of job matches rises together with rising stocks of unemployed and vacancies within and across prefectures suggesting significant spillover effects. A model comparison shows that the spatial spillovers are best captured using a contiguity weight matrix and are restricted to the local labor markets. Finally, the estimates of the matching function in different periods indicate that job seekers have substantially shifted their job-search behavior over time.