Gross Worker Flows and Unemployment Dynamics in Japan

This paper studies worker flows dynamics in Japan for the period between 1980 and 2009. We construct gross worker flows data from the monthly Labour Force Survey. Our data enables us to examine the size and cyclical patterns of the flows and transition rates between the states of employment, unemployment, and not-in-the labor force. We find that the cyclical pattern of worker flows is similar to that found in other countries, while worker flows in Japan are generally smaller than those in the U.S. and European countries. We also decompose changes in unemployment into contributions due to changes in unemployment inflow and outflow rates. We find that both inflow and outflow rate play an important role to account for variation in the unemployment rate in Japan.