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Adjustments of regular and non-regular workers to exogenous shocks: Evidence from exchange rate fluctuation

Author

Listed:
  • Izumi Yokoyama

    (Graduate School of Economics, Hitotsubashi University)

  • Kazuhito Higa

    (Economic and Social Research Institute, Cabinet Office)

  • Daiji Kawaguchi

    (Graduate School of Economics, University of Tokyo)

Abstract

We investigate the heterogeneous adjustments of regular and non-regular workers exploiting the exchange rate fluctuation and heterogeneous dependence on international trade across firms as a source of exogenous variation. An analysis of panel data of Japanese manufacturers reveals that the appreciation of Japanese Yen spontaneously decreases the sales of exporters and the employment of non-regular workers, but it moderately reduces the employment of regular workers with a time lag. Firms relying heavily on exporting tend to implement more significant adjustments of non-regular employment in response to exchange rate shocks. This finding provides support for the claim that firms are likely to adjust non-regular workers to absorb exogenous shocks and to insulate regular workers from the shocks in an uncertain business environment.

Suggested Citation

  • Izumi Yokoyama & Kazuhito Higa & Daiji Kawaguchi, 2018. "Adjustments of regular and non-regular workers to exogenous shocks: Evidence from exchange rate fluctuation," Bank of Japan Working Paper Series 18-E-2, Bank of Japan.
    • Handle: RePEc:boj:bojwps:wp18e02
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    References listed on IDEAS

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    Cited by:

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    2. Yokoyama, Izumi & Kodama, Naomi & Higuchi, Yoshio, 2019. "Inequality through wage response to the business cycle–Evidence from the FFL decomposition method," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 87-98.
    3. Timothy DESTEFANO & HANEDA Sho & KWON Hyeog Ug, 2019. "Determinants of Structural Adjustment and Employment Use in Japan: Firm Characteristics, Offshoring and Industrial Robotics," Discussion papers 19067, Research Institute of Economy, Trade and Industry (RIETI).
    4. Teruyama, Hiroshi & Goto, Yasuo & Lechevalier, Sebastien, 2018. "Firm-level labor demand for and macroeconomic increases in non-regular workers in Japan," Japan and the World Economy, Elsevier, vol. 48(C), pages 90-105.
    5. Sohei Kaihatsu & Maiko Koga & Tomoya Sakata & Naoko Hara, 2019. "Interaction between Business Cycles and Economic Growth," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 37, pages 99-126, November.
    6. Nicolas Châtelais, 2022. "Why is inflation rising so little in Japan? [Pourquoi l’inflation augmente-t-elle peu au Japon ?]," Bulletin de la Banque de France, Banque de France, issue 242.

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    More about this item

    Keywords

    Exchange Rate; Permanent Shocks; Temporary Shocks;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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