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Economic growth and labor market friction: a quantitative study on Japanese structural transformation

Author

Listed:
  • Sim Seung-Gyu

    (University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan)

  • Oh Seungjoon

    (Peking University HSBC Business School, 749, Xili, Shenzhen 518055, China, Phone: +86-755-2603-2740)

Abstract

This paper develops a tractable multi-sector endogenous growth model with labor market friction and human capital accumulation to analyze the underlying link between economic growth and labor market institutions. The model, calibrated based on the Japanese structural transformation episodes, demonstrates that lifetime employment system has contributed to unprecedentedly rapid economic growth, by enhancing human capital accumulation and facilitating physical capital formation. The counterfactual experiment finds that had the job durations of a typical worker been 1 year (roughly one tenth of the actual average job duration) for 1960–1990 in the Japanese labor market, the non-agricultural GDP per capita in 1990 would have accounted for 71 percent of the actual values.

Suggested Citation

  • Sim Seung-Gyu & Oh Seungjoon, 2017. "Economic growth and labor market friction: a quantitative study on Japanese structural transformation," The B.E. Journal of Macroeconomics, De Gruyter, vol. 17(1), pages 1-38, January.
    • Handle: RePEc:bpj:bejmac:v:17:y:2017:i:1:p:38:n:5
    DOI: 10.1515/bejm-2015-0178
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    References listed on IDEAS

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    More about this item

    Keywords

    economic growth; labor market institution; structural transformation;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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