Gross worker flows and unemployment dynamics in Japan

This paper studies the dynamics of worker flows in Japan between 1980 and 2009. We construct gross worker flows data using the monthly Labor Force Survey. Our data enables us to examine the size and cyclical patterns of the flows and transition rates between employment, unemployment, and not being-in-the labor force. We find that the cyclical pattern of worker flows is similar to that found in other countries; however, worker flows in Japan are generally smaller than those in the US and European countries. We also decompose changes in unemployment into contributions from unemployment inflow and outflow rates. We find that both inflow and outflow rates significantly affect variations in unemployment.

► We study the dynamics of worker flows in Japan between 1980 and 2009. ► A set of stylized facts on worker flows in the Japanese labor market are established. ► This paper addresses the ins and outs of Japanese unemployment. ► We find approximately a 50:50 inflow/outflow split to unemployment variations.