Industrial Diversity and Metropolitan Unemployment Rate


The main goal of our study is to evaluate whether or not industrial diversity helps reduce the unemployment rate of a metropolitan area. We used a data set from Japan’s 118 metropolitan areas from the year 1995 and determined from our analysis that although industrial diversity might reduce the unemployment rate of a metropolitan area, it is only one of several factors and that other factors might have a stronger impact on unemployment rate. Second, it was found that for both the manufacturing and the construction industry, location quotient has a negative relationship with the unemployment rate of a metropolitan area. We also discovered that the more highly educated a metropolitan population is in terms of the percentage of graduates of institutions of higher learning, the lower will be its unemployment rate.

[JEL Classification]: J6, R1, R5

Key Words
Unemployment Rate, Industrial Diversity, Frictional Unemployment, Structural Unemployment, Location Quotient, Metropolitan Area

** The earlier version of this study was accomplished within the organization Urban Revitalization of Kansai Region in FY2002, sponsored by Nihon Keizai Shinbun. We would like to thank the project members for their discussions and comments on the earlier version. Especially, we would like to thank Hitoshi Akiyama (UFJ Research Institute), Kyoichi Futagami (Osaka University), Takenori Inoki (International Japanese Culture Research Center), Yoshiaki Shikano (Doshisya University) and Michihiko Tachi (Nihon Keizai Shinbun).
* Keizo MIZUNO (School of Business Administration, Kwansei Gakuin University); Fumitoshi MIZUTANI (Graduate School of Business Administration, Kobe University); Noriyoshi NAKAYAMA (Faculty of Commerce, The University of Marketing and Distribution Sciences)

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