An estimated search and matching model of the Japanese labor market |
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Institution: | 1. School of Political Science and Economics, Tokai University, 4-1-1 Kitanakame, Hiratsuka, Kanagawa 259-1292, Japan;2. University of Marketing and Distribution Sciences, 3-1, Gakuen-Nishimachi, Nishi-ku, Kobe, Hyogo 651-2188, Japan;3. Graduate School of Economics, Kobe University, 2-1, Rokkodai-cho, Nada-ku, Kobe, Hyogo 657-8501, Japan |
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Abstract: | This paper studies how well a simple search and matching model can describe aggregate Japanese labor market dynamics in a full information setting. We develop a discrete-time search and matching model with a convex vacancy posting cost and three shocks: productivity, separation, and markup shocks. We use the model as a data-generating process for our empirical analysis and estimate it by using Bayesian methods. The model is successful in replicating the behavior of unemployment and vacancies in Japan. However, we also find that the success of the model relies on shock processes that are not empirically plausible. |
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Keywords: | Search and matching model Unemployment Bayesian estimation Japanese labor market |
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