Regulating the timing of job search: evidence from the labor market for new college graduates, by Hiroko Okudaira

 

Regulating the timing of job search: evidence from the labor market for new college graduates

Hiroko Okudaira, Doshisha University, Labour Economics, Volume 67, December 2020, 101941

Abstract: In entry-level labor markets, students search for post-graduation positions well in advance of their actual start dates, prompting debates over regulating job search timing. This study examines a unique case concerning the new college graduate labor market in Japan, where a guideline revision successfully delayed the timing of job searches and forced market participants to search under a shorter horizon. Based on differential exposures to the guideline revision across regions, I find that the revision significantly increased the employment rate at graduation. No positive effect was observed on students’ human capital investment. Additional analyses offers one plausible interpretation, that the positive employment effect was driven by thick market externality.

"This paper provides the first evidence on the consequences of regulating job search timing by exploiting the unique case of the new college graduate job market in Japan, where a guideline revision successfully delayed search timing and forced market participants to search under a shorter horizon. 

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"By 2009, the job search timing advanced to the middle of the junior year, nearly 18 months prior to graduation. In 2010, the biggest business association announced it would revise the guideline and establish a job search start date for the first time since its introduction. 

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"Unlike previous cases, however, the revision successfully delayed the overall timing due to the closure of a popular online platform until the first date specified in the revision. Because college students start communicating with firms’ personnel via these online platforms by registering for first-step seminars and because these online platforms were so dominant, the market was diluted substantially in that much fewer firms and students were available in the market prior to the first date.

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Xiaolin Xing and I included some of the unsuccessful attempts to control the timing of the college graduate market in Japan in 

Roth, A.E. and X. Xing, "Jumping the Gun: Imperfections and Institutions Related to the Timing of Market Transactions," American Economic Review, 84, September, 1994, 992-1044