Measuring Search Frictions Using Japanese Microdata

This paper estimates matching functions to measure search frictions in the Japanese labor market and presents determinants of search duration to explain the effect of unemployment benefits on a job seeker’s behavior. We employ administrative micro data that track the job search process of individuals who left or lost their job in August 2005 and subsequently registered at their local public employment service. Our finding is that the matching function would exhibit decreasing returns-to-scale for job seekers and vacancies, rather than constant return-to-scale. We also find that generous
unemployment benefits lengthen (shorten) the duration of job search for job seekers who voluntarily (involuntarily) leave employment.