Migration Response to High Unemployment Rates: Spatial econometric analysis using Japanese municipal data

Using Japanese municipal dataset between 1980 and 2010, this paper empirically analyzes the underlying mechanism of interregional labor migration. Since the existing literature shows that regional disparities in unemployment rates have decreased gradually, our main concern is to uncover how the labor migration contributes to reducing the unemployment disparities. A novel approach to the migration analysis is to incorporate interregional dependency in migration decisions by using spatial econometric models. Our estimation results show that high unemployment rates play a role as a push factor for migration, and that there is a statistically significant and positive spatial dependence in interregional migration. Furthermore, we find a negative relationship between percentage changes in relative unemployment rates and out-migration rates. Therefore, our results suggest that high unemployment rates have forced workers away from the regions in a wide sphere, which has contributed to reducing regional disparities in unemployment rates.