RIEB Discussion Paper Series No.2021-03

Title

Agglomeration Effects on Job Matching Efficiency: Evidence from Japan

Abstract

This paper examines the effect of agglomeration on the regional efficiency of matching of job seekers and vacancies by using Japanese regional panel data. We find that a higher population density improves or at least does not deteriorate regional matching efficiency for most of the sample periods, suggesting that the benefit of agglomeration tends to be significant. However, the effect is significantly negative in 2011 when a serious earthquake and tsunami occurred in Japan, suggesting that the congestion effect is superior to the benefit of agglomeration when labor markets suffer from damages, such as those caused by natural disasters.

Keywords

Job search; Matching function; Agglomeration; Local labor market

JEL Classification

J64, R11

Inquiries

Yudai HIGASHI
Graduate School of Humanities and Social Sciences, Okayama University
3-1-1, Tsushima-naka, Kita-ku, Okayama 700-8530, Japan
Junior Research Fellow, RIEB, Kobe University