In this project, the PI plans to examine regional labor markets in Japan, Great Britain and the United States and their response to macroeconomic shocks. He first plans to investigate adjustment of real wages, unemployment or migration rates in response to shocks. The effect of cultural and institutional factors that has an impact on labor market behavior will be mitigated by doing comparisons across regions within the same country. The second part of the analysis will be an attempt to cast some light on the causes of these differences in response patterns. The PI will conduct some preliminary tests for the causes of the regional differentials by examining the roles of unions, housing markets, industry structure, education or skill differentials and other factors. After isolating which hypothesis appear to be most promising, he intends to develop a full proposal and test a theoretical model about why regional markets may vary in their responses to these shocks. The investigator plans to link this work to current research on efficiency wages and insider-outsider models of the labor market which have been used to explain aggregate unemployment and real wage movements.
