Spatial spillovers in job matching: Evidence from the Japanese local labor markets

This paper examines whether and how job matching in a local region is affected by unemployment and vacancies in neighboring regions in addition to those in its own region. By using panel data from Japan, we estimate the matching function accounting for the spatial spillovers from neighboring regions. According to our results, job seekers in the local region compete with their counterparts in neighboring regions for jobs. This spatial competition for jobs stems from inter-regional job search, observed as spatial spillovers. Furthermore, catastrophic events, such as natural disasters, boost the magnitude of spatial spillovers in job matching.