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News Release

Regional Gaps in the Employment Situation
- Creating Demand for Labor by Harnessing Demand from Outside the Region is Key -

July 12, 2006


The employment situation differs considerably between regions. In terms of employment rate (number of people employed/population aged 15 or over), the gap between the highest (Tokai Region) and the lowest (Hokkaido) was 7.1 points in 2005. Because the fluctuation of the employment rate gaps between regions is small in the medium-term, it is highly likely that the gaps are due to structural factors. This report analyzes the reasons for employment rate gaps from both a labor demand and a labor supply perspective.

From a labor demand perspective, the strongest correlation with employment rates may be seen in the level of demand in each region (per capita GDP). One reason for the gap in demand levels is the scale of demand from outside the regions (exports). In other words, regions with a high employment rate tend to achieve a high employment rate by harnessing demand from overseas and outside the region, whose expansion is not restricted by the size of the region's population, its industrial structure, etc.

Turning to the labor supply perspective, it has been suggested that the employment rate gap between regions is due to differences in size of population in the younger age bands, where the employment rate is low. However, the reality is that, in regions with a high employment rate, the employment rate does not fluctuate according to the structure of the population, but is high across all age bands, and that the ratio of women and elderly persons in employment is particularly high. Accordingly, it appears that the most important determining factor in the employment rate is the scale of demand for labor, and that, to a considerable extent, the labor supply side meets the demand for labor through the employment of women, elderly people, etc.

Thus, if regions with a low employment rate are to boost their employment rate, it is important that they create demand for labor and promote the employment of women and elderly people. Expanding the demand for labor is particularly important, and, to this end, regions, while taking advantage of local characteristics, should set about strengthening their industrial infrastructure and the structure of their economies by harnessing demand from outside the region (exports of goods and services, etc.).

For more information on the content of this report, please contact: Hideki Matsumura, the Japan Research Institute, Limited.

Tel: 03-3288-4524

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