1986 Fiscal Year Final Research Report Summary

Modeling and Simulating Labor Market Dynamics.

Research Project

Project/Area Number	60530003
Research Category	Grant-in-Aid for General Scientific Research (C)
Allocation Type	Single-year Grants
Research Field	一般理論
Research Institution	Kyoto University Institute of Economic Research
Principal Investigator	ARIGA Kenn Institute of Economic Research, Kyoto University, Associate Professor, 経済研究所, 助教授 (60159506)
Project Period (FY)	1985 – 1986
Keywords	Employment Adjustment / サーチモデル / 労働市場の動学モデル / 失業の私的社会的費用
Research Abstract	The research is concerned with quantitative analysis of employment adjustment. Theoretical analysis focused on the consequences of heterogeneity of the jobs offered and workers seeking the jobs. The labor market is modeled as stochastic matching processes among these heterogenous job slots and workers. We find that in general the Nash equilibrium yields socially inefficient outcomes; the precise way in which the inefficiency arise depends delicately upon the nature of heterogeneity. The theoretical model is applied for the analysis of the labor market dynamics in Japan. The simulation model is driven by a AR(1) process in capital productivity representing the business cycle. The model also explicitly takes account of differences in labor productivity and exogenous separation rate across age and sex. The model successfully captures cross sectional and intertemporal stylited facts about labor market dynamics in Japan.